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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 (5,649 Views)
PuntPal
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I am not concerned with demand...we are talking about the shortage myth which is based on a bogus claim we havent been building enough houses.

The basic fact is we have been building extra bedrooms and this was missed by the crude analysis that focussed on Houses Built Vs Population Growth.

The size of the houses being built were ignored because it would have shown we have additional housing and trends in people per dwelling were assumed to continue until everyone in Australia was living by themself.

It was insanity!!!

We have about 5 million spare bedrooms in Australia.

Just like we should be looking at hours worked as a proxy for the strength of employment market, we should be looking at bedrooms empty as well as houses empty when we are considering supply.
"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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Sunder
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zaph
8 Jul 2011, 03:07 PM
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?
Sorry, it was 76%, but close enough.

Quote:
 
Generation Y 'keen to avoid paying rent' in favour of saving for home loan deposit

Gen Y are avoiding rent to save for a deposit. Picture: File image

76 pc of surveyed under-30s never rented
Choose to save for home loan deposit instead
Gen-Y staying at home longer than they want

KIDS won't leave home? They're probably saving for their own property.

The survey of 1000 people under 30 also found that 76 per cent admitted staying at home longer than they would have liked in order to avoid paying rent, for the purpose of saving for a home loan deposit.

Mortgage provider RAMS Home Loans CEO Melos Sulicich said this has become a common financial strategy among younger people.

"There has been a long-standing trend towards extended living in the parental home before leaving to rent," Mr Sulicich said today, releasing the survey findings.

"What we are now increasingly seeing is younger Australians using this time to save for their own home instead and avoiding renting."

The trend towards extended living at home for the purpose of savings for a deposit is strongest in Sydney, Perth and Melbourne, where housing affordability concerns are most prominent.

RAMS has responded to this trend by designing a new home loan product, "Fast Track", that enables first home buyers to get into the housing market sooner with parental help, while avoiding mortgage insurance.

RAMS chief operating officer Susan Bannigan says it's hard enough getting children to leave the family nest.

"But when they say they want to stay at home to achieve a serious financial goal, it's incredibly difficult to say no," she said.

"For them it's a win-win situation."

And of course, money to pay the utility bills and groceries grows on trees.


http://www.news.com.au/money/property/gen-yers-keen-to-avoid-renting/story-e6frfmd0-1226083424088
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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PuntPal
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...would love to see a survey done by someone other than mortgage provider (RAMS).

For the record...this is what they found:


The survey of 1000 people under 30 also found that 76 per cent admitted staying at home longer than they would have liked in order to avoid paying rent, for the purpose of saving for a home loan deposit.

What exactly has this statement revealed....that 76% of 30 year olds that live at home admit they would liked to have moved out earlier, but would rather stay home and avoid paying rent....

Wow - year that shows we have underlying/pent up demand...that has always been the case! Show me changes using the same survey techniques and you may have something.

That survey is a joke.
Edited by PuntPal, 8 Jul 2011, 04:37 PM.
"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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Admin
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Quote:
 
Mythical shortage won't stop price falls

By Dr Ed Shann
From: Herald Sun
July 08, 2011 12:00AM

THE outlook for house prices is always controversial.

Some investors think house prices never fall and others predict prices will collapse. House prices are falling modestly, but will not fall sharply unless the world economy tanks.

Some claim house prices must rise as there is a housing shortage of 200,000 houses that grows by 30,000 annually. This is bunk.

The figure is calculated by comparing how many houses are being built, with the houses needed given population growth and the current average household size.

It makes no allowance for house prices, affordability and changing tastes, so it does not tell us how many extra houses are actually wanted at current prices.

There is no housing shortage at current prices. There is a shortage of affordable housing. If house prices fell, more people could then afford to buy a house. To claim that means there is a housing shortage is like claiming there is a shortage of Ferraris or Grange Hermitage.

Lots of people would like to own them, but they cannot afford to buy them given current prices and their income.

Some draw bizarre conclusions using this calculation of underlying housing demand.

For example, house prices and interest rates rise so that fewer houses are actually affordable.

Kids stay at home with parents longer, or share rented accommodation. Actual demand for extra houses falls.

Yet the calculation of underlying demand runs on unchanged, so some claim there is a growing housing shortage.

Read more: http://www.news.com.au/money/mythical-shortage-wont-stop-price-falls/story-e6frfmci-1226090446061
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Sunder
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Alex Barton
8 Jul 2011, 04:44 PM
Quote:
 
Kids stay at home with parents longer, or share rented accommodation. Actual demand for extra houses falls.

Yet the calculation of underlying demand runs on unchanged, so some claim there is a growing housing shortage.


So what Dr Shann is expecting is that kids will stay home forever, until there are 3 generations in a house? And that people will share houses until every room has a couple in it, with no spare rooms as a break out area?

Dr Shann is confusing actual demand for realised demand. At some point in the future, those kids will want a house of their own. Actual demand hasn't fallen, just some of it has been shunted off to pent up demand.

Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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PuntPal
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Sunder
8 Jul 2011, 04:57 PM
Quote:
 



So what Dr Shann is expecting is that kids will stay home forever, until there are 3 generations in a house? And that people will share houses until every room has a couple in it, with no spare rooms as a break out area?

Dr Shann is confusing actual demand for realised demand. At some point in the future, those kids will want a house of their own. Actual demand hasn't fallen, just some of it has been shunted off to pent up demand.

What about supply coming online as these kids move out. People are dying too you know, and moving to their costal homes and moving into nursing homes...

The idea Australia has pent up demand for housing is laughable. There is demand always for housing...there is nothing exceptional going on now. Just a period of cohabitation that could last a long time.

Kids dont have to stay at home, they can rent in a share house for longer than they planned - and just sit and watch house price falls and their deposit grow.

Seems entirely rational to me.
"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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davel
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Sunder
8 Jul 2011, 04:57 PM
http://www.news.com.au/money/mythical-shortage-wont-stop-price-falls/story-e6frfmci-1226090446061



So what Dr Shann is expecting is that kids will stay home forever, until there are 3 generations in a house? And that people will share houses until every room has a couple in it, with no spare rooms as a break out area?

Dr Shann is confusing actual demand for realised demand. At some point in the future, those kids will want a house of their own. Actual demand hasn't fallen, just some of it has been shunted off to pent up demand.

Look, there is no actual demand. You can't pin it down. For a start, actual demand would have to take account of the price, and not only that the cost of debt-service, and not only that the cost of other yet items such as utilities. It would also be highly location-specific i.e. building 10000 new houses 40 miles outside Melbourne is not going to meet a demand from 20-somethings staying at home in inner-ring locations.

Not only that, different cultures have different behaviours. In some, it is expected that the child stays at home until they marry.

Not only that, as Sunder says - what space compromises will be made, and which wont?

Not only that, what are the current credit conditions? Can potential buyers get loans? See US or UK for a good 10% of demand wiped out due to no credit.

Not only that, which demand will leave the market in the absence of acceptable accomodation, and which will find an alternative arrangement?


Thats why all these "shortage" arguments are BS. About the best you could do would be to look at the "total housing capacity" by region, perhaps by bedrooms as Puntpal said, occucapncy rate trends etc, and then you might have a high-level guide versus what you're building.

Thats why its incredible that people buy this "shortage" argument. Almost every city in the developed world has had, or has, a "shortage" at some point.
Edited by davel, 8 Jul 2011, 05:06 PM.
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Sunder
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davel
8 Jul 2011, 05:06 PM
Thats why all these "shortage" arguments are BS. About the best you could do would be to look at the "total housing capacity" by region, perhaps by bedrooms as Puntpal said, occucapncy rate trends etc, and then you might have a high-level guide versus what you're building.

Thats why its incredible that people buy this "shortage" argument. Almost every city in the developed world has had, or has, a "shortage" at some point.
Have some good points there, but I think they're being applied a little unevenly - I wouldn't say shortage arguments are BS - just that shortage arguments are very difficult to prove AND disprove. Just because we can't prove unequivocally there is not shortage doesn't mean there is no shortage. It just means we can't prove it beyond reasonable doubt.

As for using bedrooms and occupancy rates, that's a load of bunkum. My parents live in a 6 bedroom house by themselves. How many more families could this supply? Zero. Five unused bedrooms is not supply. If they decide to live full time on their hobby farm, does it become supply? Not if they're leaving it as a place to store all their stuff. When they lease it out or sell it THEN it becomes supply. And whether the Brady bunch or a single person who occupies one bedroom uses it, it will have provided one supply unit to remove one demand unit from the market.
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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Rastus2
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Sunder
8 Jul 2011, 04:57 PM



So what Dr Shann is expecting is that kids will stay home forever, until there are 3 generations in a house? And that people will share houses until every room has a couple in it, with no spare rooms as a break out area?

Dr Shann is confusing actual demand for realised demand. At some point in the future, those kids will want a house of their own. Actual demand hasn't fallen, just some of it has been shunted off to pent up demand.

I think you are over simplifying what he is saying.

There are still homes being built...

There are currently more than enough homes to house every man, woman and child in Australia.
How the he'll is there then, right now, a massive shortage ? Explain that to me please....
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Sunder
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Rastus2
8 Jul 2011, 05:16 PM

I think you are over simplifying what he is saying.

There are still homes being built...

There are currently more than enough homes to house every man, woman and child in Australia.
How the he'll is there then, right now, a massive shortage ? Explain that to me please....
Because there are compromises being made to house every man woman and child in Australia.

Kids are living at home when they want to move out.

People are sharing houses when they want their own.

Clear? Glad we got that settled.
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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