Supply and demand has always been a major factor driving our property markets

So let’s start with some numbers.

These figures are for Australia and cover the 2021 calendar year.

Detached houses

  • Annual demand (sales): 425,000
  • Supply (Listed for sale): 158,000 (as of January 2022)
  • Supply in months: 4.5
  • Annual price growth: 25%

Chart01

Attached dwellings (mostly apartments)

  • Annual demand (sales): 220,000
  • Supply (Listed for sale): 60,000 (as of January 2022)
  • Supply in months: 3.3
  • Annual price growth: 15%

Chart02

Some observations

DemandAs one might expect — as real estate at its core is all about supply and demand — there is a close relationship between the supply and demand interplay and price growth.

For both detached houses and attached dwellings, the recent and rapid decline in supply is atypical and has been heavily influenced by Covid-related restrictions.

At the same time, demand was somewhat abnormally boosted by government largesse, record low-interest rates, and silly RBA overtures.

Supply is likely to increase and maybe rapidly this year as we finally learn to live with the virus (fingers crossed) and many homeowners sell in order to capitalise on higher price points.

Conversely, demand is likely to fall due to falling confidence and higher interest rates.

Price growth will slow down as a result, and we might even see prices fall if supply exceeds demand.

Finally, the attached dwelling market supply is now very tight — and is tighter than detached houses — so we are likely to see higher price growth for apartments and townhouses than detached houses over the short term.

icon-podcast-large

Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related
topics. Subscribe now, whether you’re on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you’re on iPhone / iPad or an Android
device.

icon-email-large

Prefer to subscribe via email?

Join Michael Yardney’s inner circle of daily subscribers and get into the head of Australia’s best
property investment advisor and a wide team of leading property researchers and commentators.


About

Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive




Source link

Leave a Reply

Your email address will not be published.