Australian Housing and Where it’s Heading
Well, this is always a good topic for debate but there is one clear answer over the long term. The Australian population is growing at an extraordinary rate and we’re not building anywhere near enough homes to cater for this.
A recent projection released by the ABS has the Australian population nearly doubling by 2050. What does this mean for housing? For one, this increase in population will certainly drive a continued and increasing demand for housing. There is very little chance that supply will keep up, so this expanding resident base will inevitably cause property prices to rise.
Even though I’ve mentioned above that prices will rise due to population increases and demands this is not the only driver of prices as there are some other factors in play. Andrew Wilson is the senior economist with Australian Property Monitors and his analysis shows that the proportion of average disposable income required to finance the average home loan has remained the same for decades. This is in line with another blog on our website about affordability. It’s not the price of the home that drives this but rather the cost to get a loan and maintain it with the costs of rates etc. So price growth in property is also driven by income levels and unemployment. Based on employment figures and state incomes the best performing state and city over the next 10 years will be Brisbane at around 6% p.a.
There are quite a few experts out there looking into some creative ways of increasing the housing availability levels, in a fast amount of time, to cater for the expected population growth. They are also looking at ways of trying to de-centralise the growth away from our Capital cities. This might then alleviate some of the pressures the cities are already feeling with infrastructure growth.
All in all the growth is a great thing for investors and shows that over the long term housing prices will continue to increase. Whilst interest rates are low and looking to stay that way for at least the next 12 mths then now is the time to try and use one of the small windows available to enter the market. If you are looking at buying then please give us a call.