According to data from SQM Research the number of property listings surged 44 percent in 2010 suggesting the Australian property market is set to take a slide in fortunes this year.
SQM Research MD, Louis Christopher said “It’s still very clear to us that they are now at levels that would suggest a downturn in the housing market, although the stock levels have fallen seasonally. The overall number is up now by 44% across the nation.”
With 328,270 residential property listings in December, it is hard to find any evidence to support claims that a housing shortage will put a floor under Australia’s grossly inflated market.
Across the country, Brisbane recorded increased listings of 59.4% for the year, Darwin 57.3%, Perth 54.8%, Canberra 46.5%, Melbourne 42.7%, Adelaide 39.6%, Hobart 24.6% and Sydney 22.6%.
Melbourne has the biggest oversupply of properties with 24,884 houses and 8,981 units for sale.
» 44% jump in property listings points to price falls in 2011: Expert – Smart Company, 10th January 2011.
This is an extract from an article we published on March 19th 2010 :
Builder’s lobby group says we need to build more houses
The Housing Industry Association (HIA) has this week released a report showing Australia’s housing “shortage” will quadruple if we don’t act now and increase the number of homes being constructed.
The group has called for another 466,000 homes to be built by 2020, with the “shortage” currently at 109,000 homes. The report shows Australia’s population is likely to grow to 36 million by 2050, further straining affordability.
A severe housing shortage in Australia is said to put a floor under house prices, and used by the industry to dismiss any notion there is a housing bubble in Australia.
On the 9th February 2006 a similar article was ran in California :
The California Building Industry Association (CBIA) continues to express alarm over what it calls an ongoing housing crisis in Southern California.
Alan Nevin, the association’s chief economist, projected in a 2006 CBIA Housing Forecast that only 185,000 to 205,000 building permits will be granted this year, far short of the 240,000 new homes needed each year.
Southern California has been experiencing a massive population boom in recent years and it’s believed that 6 million new residents will be living in the region by 2020. The population increase, coupled with the housing shortage, has the CBIA worried that it will be increasingly difficult for first-time homebuyers to find a moderately priced unit.
“Los Angeles and Ventura counties are suffering from a housing crisis,” said Holly Schroeder, chief executive officer of the Building Industry Association Greater Los Angeles Ventura Chapter. “While we have seen increases in permitting, it still consistently falls far below the needs of our region. We have to find a way to take care of our own and provide housing to those that need it and want it.”
Yet, despite the shortage, this is what happened to Los Angeles’ House prices after the article was published :
Even the U.K. had a shortage of houses prior to their housing crash :
Shortage of homes over next 20 years threatens deepening housing crisis
19 March 2002
Britain is heading for a property shortage of more than a million homes by 2022 unless the current rate of housebuilding is dramatically increased, according to reports from the Joseph Rowntree Foundation (JRF). The evidence, being presented at the Foundation’s Centenary Housing Conference in London, reveals that the supply of housing is already falling behind demand faster than previously recognised.
» Housing shortage to quadruple: HIA – The Sydney Morning Herald, 19th March 2010.
» Construction industry says housing crisis has hit California – February 9, 2006.
» Shortage of homes over next 20 years threatens deepening housing crisis – March 19th, 2002.
So does that mean the property shortage no longer exists?
Robert, I suspect there was never a shortage in the first place? Like think about it, have we really built so many houses that we now have an oversupply.
We now have an interesting situation. With the QLD floods playing havock with our terms of trade, where will the RBA sit on rates?
Given these headlines that are now appearing mainstream, and everyone I know who’s trying to sell dropping prices, the wind appears to be out of the sail (pardon the pun).
Most still believe property is a good investment….Just there’s no buyers…..The tipping point must be around here some where.
Prices are falling-No doubt about it, just wait for them to gather pace.
Federal government surplus by 2013……You’d have to be ignorant to believe that.
Its not that we have a shortage or that we have too much, the only reason that listings are surging is that the price has got way to high and people can not sell them. This will end in house price falls and they will keep falling until it gets to a price that people are willing to pay. IMO thats about 15 to 20% down from the point we are at now. Now that the capital gains are drying up and people can see the bubble for what it is the correction will have to happen untill prices hit a point that people feel its worth the debt and risk again. That could be years from now?
The ‘Floor’ under the market is the over-generous and completely insane negative gearing scheme. Just give a hint that changes will be made to it and the house of cards will fall over.
But as we all know NG is here to stay and we have to work to pay taxes to keep it going.
The HIA was telling us there was a shortage of 180,000 properties only mid to late last year. Of that number, about 80,000 were due to the homeless.
It seems that their statistics are about as flimsy as their arguments.
I agree with AverageBloke on this one. This NG setup is a joke; I bust my ass off with my own business to try and make some profits while my tax dollars pay for some slob to sit back and watch their house appreciate in the bubble and I pay for all their “so-called” tax deductions! Vanuatu is calling…
My apologies to the Administrator/Moderator/Owner Craig, for pasting a link to a specific link to a different blog;
Busting the Australian Housing Myths:
http://s4.zetaboards.com/Australian_Property/blog/main/3204321
I just couldn’t help myself but to share these stats. I found this article from a comment in Delusional Economics. It is 2006 but I couldn’t stop staring at the picture.
I agree with Average bloke the NG has played a big part in creating high house prices. But it only works to a point, when the market starts to peak as has happened with higher interest rates taking effect and with the basic price reaching the point that even incomes well above the national average start having problems offseting the debt required to invest in property you reach that point when it all falls apart.
NG will not put a floor under the market as some people say because NG is no good if the price of property stays flat or falls as you need the capital value to rise like it has over the last 10 years to make NG worth while. If the market continues to stall and fall under higher interest rates NG will do nothing to stop the correction in prices.
Yes I agree NG is a problem but it will not stop the crash from taking place it just means that when it happens it will be bigger! When it dose happen that would be the best time to get rid of NG.
I disagree 2bob. I know of some people who are seasoned investors. They started investing in property simply to take advantage of NG deductions against their incomes. This was back in the 80’s and 90’s when homes were affordable and capital gains were marginal.
These people will always be the floor. The people who have just jumped into the Ponzi market will of course get burned but it won’t be enough to bring prices back to a normal level. If it was it would have happened by now.
Time will tell and we will see just who is correct 😉 I would say a drop of 20% would bring things back much closer to normal given current pay levels but I guess it depends on what you think is normal?
I reckon a drop of 40% would make it affordable for an average worker like me to buy an average home.