Housing supply has been a hot topic in property for years now and like any property or real estate story it has been hugely sensationalised. This blogs aim is to break down the argument using the actual figures, not a narrative used to generate clicks and sell advertising space.
There are two main indicators that give us the best view of the supply situation in each city and across Australia. These indicators, while not the whole story, give us a clearer outlook on the levers that affect supply.
- Auction Clearance Rates
Is it any wonder that property prices are surging in Sydney and Melbourne when you consider that auction clearance rates are over 80% in recent weeks and in the mid-high 70% range over the last 12 months? What this tells us is that in the established housing market there is a clear lack of supply and a pent up demand.
Just ask any retail estate agent about how their listings are going at the moment. New listings are light and buyer demand is high.
A fair question to ask at this point though, is what a bout new property? As new property is normally not auctioned – this is where we use the second indicator.
- Vacancy Rates
In Melbourne and Sydney, vacancy rates are at 1.5% and 1.7% respectively – what this shows is that there is pent up demand for tenancy and certainly no oversupply of new dwellings. If there were too many new apartments, it stands to reason that vacancy rates would be increasing.
Nyko Property has recently published a document on how supply will be affected in Australia over the next four years.
What we found in this report was that Melbourne and Sydney both had a shortfall in new property construction and even Brisbane, which has a short term oversupply problem in some inner city locations, will deliver a shortfall of 29,000 properties in the next four years.
Director of Corporate Partnerships