Housing shortage or oversupply – an attempt to clear some confusion

The debate surrounding Australia’s housing shortage versus its oversupply is one that seems to regularly pop up in commentary regarding the residential property market.  The Australian public can be forgiven for being somewhat perplexed – it often feels like one moment there are too many properties on the market and buyers are scarce, while the next report sees fears raised that there won’t be enough homes to accommodate the Australian population moving forward.

 

It is my feeling that often confusion can arise as sometimes the distinction is not made between the short term and long term issues at hand.  It is no secret that in many areas of the Australian housing market of late, property sales activity has not been as strong as we would have liked, particularly over the spring selling season which has just passed – spring has historically seen an increased number of buyers and sellers act in order to have a property transaction completed in time for Christmas. 

 

The continuing financial concerns we are seeing in global financial markets, particularly the European debt situation, combined with the interest rate uncertainty that hung around for much of the year, has likely led to the decision by many Australian property buyers to sit on the fence for much of 2011 – refraining from making a property purchase, particularly with regards to properties at the top-end of the market.  This has resulted in a situation where a number of properties have remained on the market without selling for longer periods of time – thus creating a situation where there are potentially more properties on the market than usual. 

 

In contrast, the Australian population is set to grow over coming years, which logically will create a demand for more housing.  I thought Tim Lawless, RP Data’s Head of Research, summarised it quite nicely in a recent blog post ‘Housing demand set to increase on the back of higher population growth’ (25 November 2011), in which he used data from the Australian Bureau of Statistics to calculate that overall the Australian population increases by one person every 1 minute and 31 seconds. 

 

As Lawless puts it, “Population and more importantly, the change in population, is intrinsically linked with housing demand.  To put it simply, more people means more homes”. 

 

According to the National Housing Supply Council’s State of Supply Report 2010, the gap between demand and supply stood at 178,400 dwellings as at June 2009, to which it had increased from 99,500 dwellings in June 2008. 

 

Thus, Australia’s growing population suggests that more dwellings need to be built, and at a rate that surpasses the current property shortage, for the nation to be able to house its citizens.  The types of dwellings constructed will likely need to be designed to accommodate changing demographics and social needs (such as an aging population and an increasing preference for energy efficiency), and will need to be situated in well serviced locations.

 

For more information about the properties available in your locale, please feel free to stop into your local CENTURY 21 real estate office to speak with a dedicated property professional. 

Posted by Charles Tarbey on 07/12/2011 at 8:56 AM | Categories:

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