(Bloomberg) -- Australia is battling a housing supply crunch driven by government failure to plan for a rapidly rising population, the Property Council of Australia said. 

More than 80% of Australians surveyed say there is a lack of affordable housing in their area and over half of those who rent report that they feel trapped with few alternative options, the council said in a report published Wednesday.

The study underlines the challenge for the Labor government as a lack of new supply drives a surge in rent, exacerbating existing cost of living pressures. Rising interest rates and falling property prices are set to further discourage developers from pushing ahead with new projects.

Meantime, demand is set to further swell as international students return to study and the pace of immigration roars back to pre-pandemic levels.

“We have to change things up,” said Property Council of Australia Chief Executive Mike Zorbas. “Whether it’s owned, rented or social housing, we need to provide more opportunities to produce new and more housing options.” 

The report also found:

  • More than seven out of 10 renters cited excessive deposit costs as the biggest barrier to buying a home in the next five years
  • Some 45% of Australians believe the government should provide incentives to encourage developers to build more affordable housing stock for key workers like nurses, police and teachers
  • Potential solutions include boosting supply of retirement living, purpose-built student accommodation and build-to-rent housing

A separate 2022 report by Demographia found that Australia was the sole nation with all of its major cities ranked as “severely unaffordable.” Sydney was the second least affordable market among 92 surveyed, it said.

The dire results comes even as median home prices in Sydney have slipped below A$1 million ($696,550) for the first time in almost three years.

“We don’t have enough homes. We need to build more and we need to build them sooner,” Minister for Housing Julie Collins said at the report’s launch. 

“The shared ambition to build a million new homes will require meaningful change and we are looking at ways we can ensure each level of government does their bit.”

The national government is establishing a A$10 billion Housing Australia Future Fund to support 30,000 new social and affordable dwellings in the first five years of operation, she added.

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