A Finance blog by Paul Bennion.

Australia faces a growing crisis in the supply of affordable housing, the latest report from the National Housing Supply Council has highlighted.

Released in December 2011, the annual State of Supply report found that despite the weaker market conditions, Australia’s housing shortage continues to widen. The underlying reality is that Australia is struggling to build enough houses to meet the demand of its growing population, creating a long-term shortage of homes but bringing positive news for property investors focusing on the long-term dynamics of the property market.

The report concludes that housing production in Australia needs to lift well above current trends to reduce the likelihood of housing shortages and poor affordability impacting adversely on economic growth and standards of living.

According to the report, underlying demand for housing grew by an estimated 159,200 dwellings during the last financial year, slightly more than the 156,200 forecast in the 2010 report. At the same time, additional housing supply increased by 131,000 dwellings, slightly below the 140,700 dwellings projected in the previous year’s report.

Overall, the report revealed that the gap between the demand and supply of dwellings increased by 28,200 to 186,800 during the last year, with the largest housing shortfalls evident in New South Wales and Queensland.

The annual National Housing Supply Council State of Supply Report, released since 2009, provides valuable information on the real estate markets throughout Australia, with detailed population, housing and economic statistics. The 2011 Report can be downloaded for free from www.nhsc.org.au/supply.html.