Bottlenecks in the Real Estate Supply Chain
Yes the market has softened by about 10% and with it the amount of properties for sale has also dropped considerably. Seaforth in April had 46 properties for sale. It dropped to just 16 a few weeks ago and now it has 22. This drop in homes for sale reduces choice for buyers and keeps a floor on pricing. Buyers and buyer agents we have spoken to this week are all saying they feel there is not much choice for them at the moment, which suggest that there will be increased urgency from buyers in the near future.
What I wanted to comment on this week was a great article by Michael Yardney a property investment adviser. “Australia’s housing shortage is usually blamed on population growth, sluggish construction, planning delays, labour shortages and the rising cost of building new homes. All of these factors matter, but another powerful force is sitting quietly in the background. Australia has around 4.5 million baby boomers, aged between 62 and 80, and many remain in the family home. This has created something of a demographic traffic jam. Properties that might once have returned to the market through downsizing or deceased estates remain tightly held at a time when Australia urgently needs more housing. According to analysis highlighted by demographer Bernard Salt, there may be around 1.3 million more homes occupied by older Australians today than would have been the case if they behaved like equivalent retiree cohorts in 2008. That is roughly the same number of homes the federal government hoped to build under its national housing target.” One of the big problems I see when meeting with people looking to downsize is finding appropriately sized and priced homes to move into. On the other side younger families wanting to upgrade are competing for a smaller pool of suitable properties which raise the price of those types of larger family homes.
“Our housing challenge is not only about how many dwellings we construct - it is also about how efficiently we use the homes we already have.” The full article is here. Boomergeddon: The Demographic Event Locking Up Australia’s Housing Markets
