Going against popular opinion, housing intelligence business, Hometrack, has dismissed popular claims that the Australian housing market is undersupplied.
While industry associations such as the HIA and REIA have commonly warned against the widening gap between housing supply and demand in Australia, according to CEO of Hometrack, Brendan Darcy, the opposite may be true.
Darcy said that widely quoted views of many property market commentators who believe that Australia's current building levels are not enough to meet the future demand for housing, may be based on inaccurate data calculations.
"Our analysis indicates Australia may already have an excess of housing. We estimate there are at least 10 million dwellings in Australia compared with ABS data showing occupied dwellings of 8.3 million. The extra one to two million dwellings consists of a mixture of housing awaiting sale or development, vacant dwellings, second homes, and abandoned homes," he said.
He went on to say that the ABS method for calculating the ratio of people per dwellings is based on ABS census data which in turn is based upon occupied dwellings. However, he said, Hometrack analysis which is based on postal address data indicates that Australia's current level of housing relative to its population is in line with other Anglo economies.
Following on from this, Darcy said that when looked at in the context of population growth, total residential building approvals have been running above demand.
"This points to a build-up of excess stock of housing over the past six years, despite the gap between building approvals and demand narrowing over recent months," he said.
"The concern is that business and government decisions regarding the residential housing market in Australia are being made based on demand assumptions that differ from the actual behavior of the housing market. There will always be examples of areas with an undersupply, but it's not clear from the data that we have an overall shortage relative to future demand."
The comments come on the back of the most recent ABS figures which showed an increase in the residential building approvals in February.
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