JUNE 2012 |
www.opp.org.uk WORDS |Michael Matusik
BUSINESS
AUSTRALIAN OUTLOOK | 47
ver the last two years, population growth has slowed by close to 150,000 Australia- wide, with a 100,000 drop in the actual growth rate last year.
The shortage myth O
Some Australian professionals are fi xated with the notion that its housing market has a lack of new supply. However, this paints a simplistic picture of a country with a complex market. Michael Matusik reports.
As a result, we anticipate just 135,000 new dwellings will be built in Australia this fi nancial year, against the ten-year average of 155,000 new homes built each year. Whilst dwelling starts are declining, we are now building too much stock.
The slowdown, however, has been warranted – given the drop in overseas migration during 2009 and 2010 and the oversupply of new housing in Victoria, South Australia and to some degree in Western Australia too. Unless new housing starts decline
in earnest or population growth accelerates, Victoria, South Australia, Tasmania and the Northern Territory could face an oversupply. Perth and Canberra are better positioned, with Queensland and New South Wales both undersupplied.
The good news is that migration
fi gures are up, and this suggests an increase in housing starts in coming years. Our forecast is for 155,000 new starts across Australia during fi scal 2013 and up to 175,000 starts during 2013/14.
Queensland looks set to benefi t the
most. Despite recent reports to the contrary, this is one state where new housing is undersupplied across much of it. At present, Queensland has a 16% market share of total residential building across Australia – the historic average is closer to 25%. We forecast that new housing starts in Queensland could double (up 46%) over the next two to three years, rising to 38,000 new starts during 2014. With close to $165 billion worth of new resource projects underway across the state, coupled with $29 billion worth of new infrastructure being delivered across the south-east corner of the state, the need for new housing is on the increase. But Queensland’s outlook does not mean we can paint the identical picture everywhere else. Whilst housing industry and banking economists seem bent on reminding us how undersupplied the Australia housing market is, we simply do not have heaps of undersupply.
According to some spruikers, we have a short-fall of something like 300,000 homes across the country, set to double within the next decade. Where then, with an average of 2.6 people per dwelling (2006 census), are these 800,000-odd displaced people living? Yes, too many are living it
rough, but 800,000 equates to two cities the size of Canberra or one and a half of the Gold Coast. With this thought in mind, I started
to question the undersupply myth some time back – I, too, had been guilty of buying into it. Once the facts were exposed, and the spin ignored, it became apparent that underlying demand is much less than the urban boosters want us to believe. Consider this: Spare capacity. We can fi t more people into our existing homes and
“Businesses shouting ‘undersupply’ are doing themselves and their clients a disservice”
often comfortably. The 2006 census confi rms 830,000 unoccupied dwellings across Australia – homes used only occasionally. Estimates suggest 40% are detached houses and many are in inner/ middle-ring suburbs in our capitals. Since the GFC, our survey work suggests that about 10% of these have been used on a permanent basis. We also have spare capacity in terms of bedrooms, in both owner-occupier and rental stock. And in tough times these rooms are used.
Housing demand v new supply, Australian states/territories
New South Wales Victoria
Queensland South Australia
Western Australia Rest of Australia
0 100% 35% 90% 10,000 20,000 30,000 40,000 Source: Matusik Property Insights 50,000 60,000 -9%
2012 new supply 2012 demand
-3% 80%
Michael Matusik heads independ- ent property advisory Matusik Prop- erty Insights, located in Brisbane, Australia, and has helped over 550 new residential developments come to fruition. Reprinting, republication or distribution of any portion of this material is strictly prohibited without the written permission of Matusik Property Insights.
Different migration mix. There is a change in the origins of Australia’s migrant mix. Today, migrants from China, India, Africa and the Middle- East equal those from our more traditional sources of the United Kingdom, Europe and New Zealand. These new migrants often live in
bigger family groups than traditional migrants and older Australian households, which in turn is pushing up the average household size and reducing the need to build as many new homes. A surge in our birth rate is another trend that is pushing up the average household size, with over 300,000 babies born last year alone. This surge suggests a strong and rising demand for multi-bedroom dwellings and mostly detached.
These three factors alone, we believe, have caused a paradigm shift in underlying housing demand. Past trends would suggest that for each new person in Australia, we needed to build about 70% of a new dwelling. The current need is to build around half a new home (45%) for each new person in Australia. This suggests that the new Australian housing market is nowhere near as short-changed as most of the industry bodies would have us believe. Indeed, our recent property investor
survey found that most local investors do not think that the new housing market is undersupplied. In fact, many think that there
are too many new dwellings (and importantly, without substantial points of difference) on the market at present. Property sales-related businesses
that continue to shout “undersupply” are doing themselves and their clients a disservice.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68