Australia is facing severe housing crisis?

Australia is facing severe housing crisis?

I have visited Perth, Melbourne and Sydney. Twice for Perth. Cheaper and closer. I think they are all very nice places. Perth is not as cosmopolitan as Melbourne or Sydney but has its charms too. The only thing is that by 4th day in any of these cities, I must have Asian food. Haha. Coming back to property, let’s revisit my conversation with my taxi driver who drove us back from Sydney airport back to our hotel.

Me: I must be your last passenger for the evening?

Driver: Yea, I will go home after this.

Me: How’s everything, how’s life?

Driver: Life’s good. Sydney is a vibrant city. The only issue is the property price. They’re too expensive.

This conversation happened maybe 5-6 years back and the driver told me that he was renting a place then. I hope he has a place to call his own today.

Article in jll.com.my Australia is currently grappling with a severe housing crisis, caused by a significant imbalance between demand and supply. It is characterised by low rental vacancy, rising homelessness, surging rents and dwelling prices. This is a persistent housing crisis that is unlikely to be resolved in the short-term.

The combination of labour shortages, rising construction costs, and industry insolvencies has created a perfect storm, which has severely hampered Australia’s housing market increased supply. As a result, housing completions remain well below pre-pandemic levels, despite the urgent need for more housing. This situation is likely to persist in the short to medium term, affecting availability and affordability of housing across the country, albeit potentially at a more moderate pace than recent years. Read more here: Article in jll.com.my

Every time there’s a shortage, prices go up, do they come down after shortage has passed?

The answer lies in your answer to my question. If you are one of the owners who bought a unit during the shortage period, so you paid AUD1,000,000 for your property. (median property price in Melbourne). Now, they tell you that the market shortage is over and now the supply is equal to demand. You thought of moving and would like to sell your property. Someone called you up and told you that he wanted to buy your property but he wants a big discount since there are many other choices. What’s your answer?

Your answer would be to ask this person to go and buy other discounted units, right? This is why once owners have purchased a property at a certain price point, there is no way they would sell it lower than the price they paid. Unless of course they face financial issues, then maybe they will sell with a discount for speed. Else, they will hold, they will negotiate and they will ensure the price they sell is at least the price they bought.

This is why except for a financial crisis where many are desperate and needs money, property prices would either inch upwards or stay stagnant. Happy understanding.

Please share with people you care. You can get daily updates too.

Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). 

Alternatively, Follow me on Telegram here.

Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles.