The impact of inaccurate population forecasts in Australia’s housing supply challenges

One of the challenges our government is facing in handling the housing crisis is dealing with inaccurate population forecasts.

HIA Chief Economist Tim Reardon recently highlighted a startling fact: “Australia’s population hit 26.8 million in September 2023, surpassing the Australian Government’s forecast by over a decade."

This revelation came as the ABS released its latest quarterly data, encompassing aspects like births, deaths, and migration across Australia and its states and territories.

Back in 2007, the Intergenerational Report (IGR) predicted that Australia wouldn’t see a population of 26.8 million until around 2034/35.

Mr Reardon points out this significant underestimation, labelling it a “systemic policy failure” that exacerbates our ongoing housing supply challenges.

It's a bit of a numbers game.

The ABS projected our national population would only reach 26.9 million by mid-2024.

Yet, we had already crossed this threshold when they made their announcement in November 2023.

It's more than just an interesting statistic – it's a wake-up call about the accuracy of our forecasting tools.

What does this mean for housing?

According to Mr Reardon, "Essentially, an investment in better ABS data collection, particularly in areas of land use and population, could significantly impact housing supply – potentially more so than other government initiatives."

It’s about understanding the scale of the issue, so appropriate plans can be made, he said.

He further explained:

"Local and state councils are often criticized for not providing enough homes, but they’re working with incomplete information on population growth.

This isn't a new problem that just popped up post-pandemic; it’s a longstanding issue."

The Australian government is already working on addressing housing shortages, with plans to build 1.2 million homes.

Mr Reardon commented:

"A key part of this strategy should be investing in enhancing the quality of housing data.

This investment is crucial in tackling the systemic failures in policy-making.

A focused approach is needed, particularly in national reporting of land supply.

This could enable effective benchmarking of how local councils are performing in terms of delivering new homes.

After all, making sound policy decisions hinges on having accurate, up-to-date data."

About Sam Alaaeddin With well over a decade's experience in asset and wealth management, Sam is an Elite Wealth Planner at Metropole and leverages his expertise to help clients achieve their wealth management goals. He holds a bachelor’s degree in law and commerce (Finance) and a Diploma in Financial Planning.