The Albanese government knows Australia has a housing problem.

It says the country is suffering from “historic underinvestment” in housing that’s created a significant supply shortage.

In its 2024-25 budget, it has dedicated an entire chapter to the crisis — a sign of how seriously the issue is considered.

“Australia’s housing system has been unable to build enough new housing stock to keep up with the needs of our population,” it warns.

“This has caused a growing supply deficit, resulting in worsening affordability for both renters and first-home buyers.”

In the special housing chapter, Treasury officials have illustrated the problem with more than 20 graphs.

Here are 10 of the most illuminating ones.

They help to explain why the government will spend $1.9 billion to increase Commonwealth Rent Assistance in coming years. It knows how much pressure the private rental market is putting on low income households.

Australia’s housing supply is low by international standards

The government has pointed out that Australia has fewer dwellings per 1,000 people than the OECD average.

According to the OECD, Australia’s level of housing supply was 420 per 1,000 people in 2022.

That lags behind comparable countries such as Canada, the US and the UK (England) — which are all below the OECD average too.

A lack of supply is making it harder for people to buy or rent

Treasury officials say the shortage of housing stock has been making it more difficult to find a property to buy or rent.

The number of homes being offered for sale in Australia has fallen since 2015, and the number of homes for rent has been falling since early 2020.

It has seen the rental vacancy rate fall below 1.5 per cent – and 3 per cent is considered the rate that reflects a “balanced” rental market.

That refers to a situation in which there is modest growth in rents, and where landlords and tenants have similar bargaining power.

In some parts of Australia, including in some capital cities, the rental vacancy rate has even declined to as low as 0.5 per cent.

Supply shortages contribute to affordability pressures

Australia’s housing system hasn’t been able to build enough new housing stock to keep up with the needs of its population.

Our population has been growing too quickly in recent years, and, when coupled with changes in peoples’ housing preferences, it has resulted in worsening affordability for renters and first-home buyers.

Given the lag in housing supply responding to those changes, it’s contributed to rising house prices and worsening affordability.

Nominal dwelling prices and advertised rents have more than doubled since the mid-2000s.

As a consequence of those price pressures, a growing share of household incomes has been going towards housing and housing services.

Treasury officials say, for prospective home-buyers, the portion of income needed to service a new loan has jumped from an average of 29 per cent in 2020 to 46 per cent in 2023.

That’s well above the long-run average of 35.7 per cent and above the 30 per cent threshold for mortgage stress.

Long-term decline in affordability

In early 2002, the median house price was 4.9 times the median gross disposable household income.

In early 2024, this had increased to 8.6 times.

It’s also taking Australians much longer to save for a deposit. In early 2002, it took less than seven years to save a 20 per cent deposit. But now it’s taking 11.4 years.

“These factors have contributed to declining rates of home ownership over time, and more people are now renting,” the budget says.

Investment by governments in social housing has declined over decades

In addition to low levels of housing stock, rates of construction of social housing (which includes both public and community housing) have been falling for decades.

The Australian Institute of Health and Welfare (AIHW) defines public housing as rental housing that state and territory governments provide and manage.

It is a subset of social housing.

Social housing is rental housing fully or partly funded by government, owned or managed by community organisations or governments, and includes public housing, state owned and managed Indigenous housing, community housing and Indigenous community housing.

The government says public housing completion and the share of social housing stock as a proportion of the total stock has declined for the past three decades.

Since 1996, the level of social housing construction has not been enough to keep pace with sales and demolitions of existing social housing stock.

So what’s the government doing about it?

Since winning the 2022 election, the government has made nearly $26 billion in commitments to the housing problem.

In last night’s budget, it added another $6.2 billion in new commitments to the cause.

However, since the vast bulk of initiatives have previously been announced and set-in-motion, a number of last night’s announcements referred to additional funding to pre-existing initiatives.

New commitments in the 2024-25 budget:

• An extra $1 billion to states and territories to the Housing Support Program to help state and territory governments build “enabling infrastructure” for new housing– to connect essential services such as water, power, sewerage and roads. This investment expands on the $500 million already committed.
• $1.9 billion to increase the maximum rates of Commonwealth Rent Assistance by a further 10 per cent to alleviate rental stress (over five years from 2023-24). This will have an ongoing cost.
• $88.8 million for 20,000 new fee-free TAFE places (over three years from 2024-25), which includes increased access to pre-apprenticeship programs, in courses relevant to the construction sector.
• An additional $1.9 billion in concessional loans to community housing providers and other charities to support delivery of new social and affordable homes under the Housing Australia Future Fund and National Housing Accord.
• Allow foreign investors to purchase established Build to Rent developments with a lower foreign investment fee, conditional on the property continuing to be operated as a Build to Rent development.
• $423m in additional funding (over five years from 2024-25) to the National Agreement on Social Housing and Homelessness to boost support for social housing and homelessness services.

Those measures will complement the well-publicised “target” to build 1.2 million new, well-located homes over five years, starting from 1 July 2024.

Tertiary education sector needs to do its part

And finally, the government says the tertiary education sector is very important for Australia’s economy but the number of students it is bringing into the country is putting pressure on the private rental market.

Therefore, it says it will work with universities to increase the availability of student housing by limiting international student enrolments based on factors including how much student accommodation universities can provide.

That will cost $2.1 million over four years from 2024-25.

“To deliver more accommodation for students and to reduce pressure on the private rental market, the government will work with the higher education sector to develop regulations that will require universities to increase their supply of student accommodation,” the budget says.