"What undersupply?" says analyst
By
Kevin Eddy
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24/08/2010 12:00:00 AM
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1
comments
Property analyst Michael Matusik has challenged claims that Australia has a chronic housing shortage.
"Disbelieve anyone whose sales pitch is largely based around how much the market is under-supplied," said Matusik, who runs the Matusik Property Insights consultancy. "Even when the new stock for sale is affordable, or better still offers value-for-money, buyer interest is weak. How can this be? Aren’t we so under-supplied with new housing that it is bordering on a national crisis?"
Matusik argued that the situation is, in fact, the exact opposite - heading towards oversupply. He suggests that the impact of overseas migrants is being overestimated and the effect of growing household sizes being underestimated.
"Much of the net overseas migration – up to 60% in some states – doesn’t add up to new housing demand. The new arrivals are either tertiary students, business people on temporary work visas or those who fit into the family-reunion category," he added. "New migrants live with, on average, one more person per household than older Australian households. The recent increase in household size reflects current demographic trends rather than housing stress."
When the change in household size is modelled against population growth, he continued, new housing demand is not as strong as most think.
"We have been over-consuming in housing for some time. There are 830,000 unoccupied dwellings across Australia and the latest advertised dwellings for rent from RP Data suggest the vacancy rate is well over 3%. In short, the residential market is not over-supplied," he concluded.
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Justin on
26 Aug 2010 03:01 PM
Hmmm... it''d be helpful if the analyst made an attempt to explain why houses, worth some 4 years of average homeowners income, is now 10-11 years of average homeowners income. The explanation for this has been oversupply. If this analyst believes that this explanation is inadequate, I''d like to hear an alternative explanation that better accords to the facts.