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Chronic Australian Housing Shortage is a Myth - Analyst Pointing to an Oversupply; Ryder and Matusik
Topic Started: 7 Jul 2011, 05:04 PM (5,644 Views)
zaph
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Where's Claw when you need him?

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Chronic housing shortage a myth, with analyst pointing to an oversupply

AUSTRALIA is building too many houses. Now, there's something you don't see written very often. It runs contrary to the song the developer lobby has been singing, repeatedly, for several years.

But it's an argument that needs to be considered by anyone interested in facts rather than propaganda from vested interests.

Independent property analyst Michael Matusik believes we are moving more towards oversupply than shortage in housing and I agree with him. I have never believed the industry rhetoric about "a chronic housing shortage crisis".

His argument includes the observation that Australia's population growth has slowed markedly, with a 100,000 drop over the past 12 months. As a result, he says, the underlying demand for new housing has dropped from 180,000 starts a year to about 125,000.

On this basis, he says: "We are now building too much stock."

Building industry groups keep claiming an under-supply because they overestimate "underlying demand".

Media keeps reporting these claims as fact, but in reality they're guesstimates.

Whether deliberately (for political reasons) or through incompetence, industry lobby groups keep publishing inflated estimates of underlying demand - which, they claim, is more than the number of homes actually being built.

.....

Right now, there are many good reasons why investors should be considering a move in this buyers' market. But these reasons do not include a chronic shortage.

Those who believe this myth and buy in the wrong areas face a bleak future.

Terry Ryder is the founder of hotspotting.com.au

Read more: http://www.theaustralian.com.au/business/property/chronic-housing-shortage-a-myth-with-analyst-pointing-to-an-oversupply/story-fn9656lz-1226089062866
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Annie_Smith
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zaph
7 Jul 2011, 05:04 PM
zyph, you are right people are being cheated by these rumors.
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PuntPal
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Annie_Smith
7 Jul 2011, 05:56 PM
zaph
7 Jul 2011, 05:04 PM
zyph, you are right people are being cheated by these rumors.
How can this thread have no comments...its the key issue of why there IS a bubble. Without the shortage lie - the BULLS HAVE NOTHING
"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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PuntPal
8 Jul 2011, 09:52 AM
How can this thread have no comments...its the key issue of why there IS a bubble. Without the shortage lie - the BULLS HAVE NOTHING
I thi nk there are no comments becasue most here, bull or bear would accept the shortage as being a myth.
It was based on projected needs, like population growth and that has tanked.
Babies do not create an immediate demand for new houses. Some people may upgrade to more space but we have plenty of spare bedrooms per house in Australia, so I also do not accept that most will have to upgrade.
Deaths do create supply.

The MSM are not talking about our shortages at all. In fact the opposite as evidenced by the article published.
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PuntPal
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pauk
8 Jul 2011, 11:19 AM
I thi nk there are no comments becasue most here, bull or bear would accept the shortage as being a myth.
It was based on projected needs, like population growth and that has tanked.
Babies do not create an immediate demand for new houses. Some people may upgrade to more space but we have plenty of spare bedrooms per house in Australia, so I also do not accept that most will have to upgrade.
Deaths do create supply.

The MSM are not talking about our shortages at all. In fact the opposite as evidenced by the article published.
I disagree with you on this Paul...I think people who know a bit about the housing bubble debates know there is no shortage, but everyone I know still says that is why house prices wont crash...becase we have a shortage...

Look at this for more evidence of a massive over supply of 'housing' - not houses, 'housing'...

http://www.abs.gov.au/AUSSTATS/abs@.nsf/0/8B3AF63EE8B5373BCA25773700169C7A?opendocument

For example, 86% of lone-person households were living in dwellings with two or more bedrooms; 75% of two-person households had three or more bedrooms; and 35% of three-person households had four or more bedrooms. Over a fifth (21%) of three-bedroom dwellings, and 8% of four-bedroom dwellings, had only one person living in them (table 10.3).
10.3 ALL HOUSEHOLDS, By number of bedrooms and number of persons - 2007-08
________________________________________
"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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PuntPal
8 Jul 2011, 11:36 AM
I disagree with you on this Paul...I think people who know a bit about the housing bubble debates know there is no shortage, but everyone I know still says that is why house prices wont crash...becase we have a shortage...

Look at this for more evidence of a massive over supply of 'housing' - not houses, 'housing'...

http://www.abs.gov.au/AUSSTATS/abs@.nsf/0/8B3AF63EE8B5373BCA25773700169C7A?opendocument

For example, 86% of lone-person households were living in dwellings with two or more bedrooms; 75% of two-person households had three or more bedrooms; and 35% of three-person households had four or more bedrooms. Over a fifth (21%) of three-bedroom dwellings, and 8% of four-bedroom dwellings, had only one person living in them (table 10.3).
10.3 ALL HOUSEHOLDS, By number of bedrooms and number of persons - 2007-08
________________________________________
yes, houses will not crash because of the "shortage'....this is mad as batshit!

Housing utilisation
All households (000's)
All households 7926.2

More bedrooms needed 218.5
No extra bedrooms needed 1491.0
1 bedroom spare 2857.1
2 or more bedrooms spare 3359.5



http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/3415.0Main+Features10June+2011

All households(d)
Average number in household
Employed persons 1.3
Dependent children 0.6
Total people per house 2.5


23% are lone occupants so the above numbers from the abs are really not accurate.....
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raveswei
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in addition to all these unutilized homes that are getting vacant quickly there are million more non-holiday homes that are already vacant

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http://popping-bubble.blogspot.com/

Thinking of an Australian property speculator (PI):
Inaction = missing opportunities.
Missing opportunities = losing.
Too much thinking = inaction.
Thinking = missing opportunities.
Therefore thinking = losing.

disgraceful little man Frank Castle owes a house to Salvation Army

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Sunder
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Alright. Let's throw a spanner in the works then.

One of the well known facts is that housing affordability is changing demographics. Earlier this week, News Corp published an article saying 80% of people under 30 had never moved out of home - they were staying with their parents the whole time.

Let's say house prices fall 10%. How much of those 80% of under 30 year olds would now be freed up to buy now that houses are currently unaffordable?

One of the problems is that we're "hiding" demand, by shunting them off to very difficult to detect substitutes (Where as you can count houses sold and leases signed, how do you count an adult child staying at home 1,2 or 5 years longer?)

So while houses may be near an affordability ceiling for the time being (given moderate wage rises and no falling interest rates), we probably do have a lot of pent up demand that can either be slowly released by rising wages, or a solid floor that will underpin the market during a recession. (Of course all bets are off if it becomes a serious economic crisis).
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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Sunder
8 Jul 2011, 02:29 PM
Alright. Let's throw a spanner in the works then.

One of the well known facts is that housing affordability is changing demographics. Earlier this week, News Corp published an article saying 80% of people under 30 had never moved out of home - they were staying with their parents the whole time.

Let's say house prices fall 10%. How much of those 80% of under 30 year olds would now be freed up to buy now that houses are currently unaffordable?

One of the problems is that we're "hiding" demand, by shunting them off to very difficult to detect substitutes (Where as you can count houses sold and leases signed, how do you count an adult child staying at home 1,2 or 5 years longer?)

So while houses may be near an affordability ceiling for the time being (given moderate wage rises and no falling interest rates), we probably do have a lot of pent up demand that can either be slowly released by rising wages, or a solid floor that will underpin the market during a recession. (Of course all bets are off if it becomes a serious economic crisis).
The 2011 Census will reveal the data of how many kids at home.
Agree, there is a slow trickle of demand here as well as the 30% as renters who will buy when the price is right.
I do like your thinking and it does provide a better bull argument for pent up demand.
Also $400 billion will be passed from the boomers to the next generation, so they will have the funds.....
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zaph
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Sunder
8 Jul 2011, 02:29 PM
One of the problems is that we're "hiding" demand, by shunting them off to very difficult to detect substitutes (Where as you can count houses sold and leases signed, how do you count an adult child staying at home 1,2 or 5 years longer?)
there is so much you can't count. kids at home is just one of them

how many are sharing that would prefer their own place?
how many renters are happy renting and will never have any intention of buying a place?
how many owners are putting up with free loading relatives and would rather them out?

i find the 80% figure a bit hard to swallow. do you have a link sunder?
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