Real Estate Supply Not Keeping Pace with Demand
We are not closing on a bubble! No we aren’t! Any impression of the same can be put down to lack of supply which is driving domestic real estate prices crazily. It is true that barring Belgium we are the country with highest price levels when you measure prices against relative entities like rent and income.
The Chinese property market riddle
If these surveys would have been all-encompassing, they would have explained the Chinese property price riddle. After all, Chinese properties are the cheapest across the globe when measured against rent and income. If Australia is moving on steadfastly into a bubble phase, China is moving towards a real estate plateau by the same accord. Can it be cited as the case?
To elaborate, the Chinese market in the process of being heated up has become oversupplied and prices are expected to fall. Which country apparently experiencing a plateau can exhibit such disproportionate result? Boom like symptoms in a ‘cheap’ property market!
Comparing prices with income and rent may be the wrong approach
Rather than putting a lot of emphasis on income and rent, we will do well to ponder over the demand and supply equation. This will help us understand better, without being deflected off the course, why China and Australia are showing symptoms that they are.
Deficit of real estate supply
Quite in contrariety to the Chinese market, Australian real estate shows deficit of real estate supply. Supply, with all its noble intentions, has just not been able to keep pace with the market. When prices increase supply gains places but despite a risen-from-long-slumber construction industry, this has not been the case so far in our country. Yes, new construction projects are coming up but they still have a way to go.
Immigration policy rethink needed
I think our domestic policy in regards to immigration is also missing the trick. We are soaking in more than we can measure up to and this is piling on demand even further. Skilled migration can help but we have got to find out- at what cost?
How do you see the supply/demand equation moving in near future?
