The independent National Housing Supply and Affordability Council will launch its inaugural report on Friday, which paints a dire portrait of Australia’s housing system.

It shows housing affordability worsened in 2023 from already challenging levels and could deteriorate further thanks to three consecutive years of significant housing shortfalls.

By the 2028/29 financial year, Australia will still be 39,000 dwellings short, the report predicts.

With rents far outpacing wage growth and rental vacancy rates hitting all-time lows, housing insecurity and homelessness has surged.

Nearly 170,000 households are on public housing wait lists and 122,000 people are experiencing homelessness.

Meanwhile, only 13 per cent of homes sold in 2022-23 were affordable for a household earning the median income.

Low-income earners, young people, those with disabilities, First Nations Australians and people fleeing domestic and family violence have been hit hardest.

Australia’s housing market is “far from healthy”, the council’s chair Susan Lloyd-Hurwitz wrote in the report’s foreword.

“An unhealthy market has periods of rampant price growth, is unable to produce enough supply to meet demand, is overly reliant on an unsupported private market to address most of Australia’s shelter needs, creates scarcity and cannot match the rich expanse of demand with a breadth of housing choice,” she said.

“The problems in our housing market are deep seated and there is no easy fix.”

While insufficient supply is a fundamental driver of Australia’s housing issues, Lloyd-Hurwitz says they are exacerbated by rising interest rates, skills shortages in the construction industry, builder insolvencies and the resumption of migration.

In August, the federal and state governments committed to building 1.2 million well-located homes over five years with demand projected to grow by 871,000 by the end of this period.

Though the report deemed the plan “suitably ambitious”, it warns the government will fall short of its target by roughly 250,000 dwellings and needs to implement measures that boost supply further.

Housing Minister Julie Collins will launch the report on Friday.

“This report lays bare the challenges in Australia’s housing system,” she is expected to say.

“(It) also provides us all with an opportunity to change our housing system, to change direction.”

The council recommends governments focus on 10 areas including investing in social housing, reducing homelessness, improving the rental market, bolstering planning systems and ensuring the tax system supports supply.

SIGNIFICANT FINDINGS IN THE STATE OF THE HOUSING SYSTEM 2024 REPORT

* Supply is at the heart of the housing crisis, with Australia lacking enough housing of all types

* Australia’s housing landscape is marked by rampant price growth, shortfalls of supply and an over reliance on a private market

* Though the federal and state governments have committed to delivering 1.2 million new well-located homes over the next five years, it is forecast to build only 903,000 dwellings with another 40,000 social and affordable homes

* Housing has become less affordable for mortgage holders because increasing interest rates have increased repayments by as much as 60 per cent

* An average aspiring home owner will have to save for about 10 years before they can pay for a 20 per cent deposit on an average home

* Rents have increased about 35 per cent since 2020, while rental vacancy rates have hit its lowest level on record and is 0.5 per cent in some capital cities

* The number of people on public housing wait lists have grown by 2.4 per cent

* The worsening affordability will hit vulnerable Australians the hardest, including low-income earners, young people, single parents, pensioners, First Nations Australians and those fleeing domestic or family violence

* Homelessness has increased with 122,000 Australians without a roof over their heads

* Demand has risen because of strong population growth but this is expected to stabilise

* Australia is struggling to meet demand because of workforce shortages in the construction industry, builder insolvencies and rising construction costs among other factors

– AAP