Australia 'needs 1m new homes'

Australia's "booming" population and continuing demand for homes means the country will require one million new homes to be built by 2013, new figures from the Housing Industry Association (HIA) show.

In its report, the organisation warns that current construction levels are insufficient and without a "substantial increase" in production, affordability will get worse and there will "almost certainly" be a rise in the number of homeless people, news.com.au states.

The site says at present building rates, Australia faces a shortfall of 175,000 homes against the 2013 target.

However, if households continue to break up and more people choose to live on their own, this could increase the shortfall to as much as 240,000 homes.

HIA chief executive of policy Chris Lamont told the site: "Supply must increase rapidly to meet expected demand."

The lack of balance between supply and demand means the affordability of property in Australia is currently at a record low.

According to figures from HIA and the Commonwealth Bank's First Home Buyer Affordability Index, affordability dropped by 3.5 per cent in the last quarter of the year.

Compared with 2007, it was down ten per cent.

Furthermore, high interest rates and tighter lending criteria driven by the credit crunch means Australians are now stretching their finances further than ever to keep a home - with mortgage repayments now accounting for a record high 29.1 per cent of an average first-time buyer's income.

And, despite HIA's call for "substantial" ramping up of building efforts, the site says new home building fell in March by 3.3 per cent, while private property construction dropped by 6.3 per cent over the first quarter of the year.

In related news, the federal government recently introduced plans for a Housing Affordability Fund that would help developers cover infrastructure and construction costs in order to lower house prices.

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