Australia Housing Escapes Peril On Undersupply: Mortgages
I have to admit that the shortage numbers they report would seem to be untenable, resulting in visible social problems. And high rents. From the U.S. I can report that shortage is highly susceptible to speculative flipping leaving housing underutilized, and household size. Both of those can change rapidly. Average household size is far smaller than it used to be. That probably used to be two parents and two kids, but it's easy for it to return to a post uni kid and a grandparent along with those two near retirees.
From the gov of australia
ABS's projection for household size
I hate to harp on this, but again, this doesn't look like a trend in a country with a stunningly high shortage of shelter. Well, time will tell on this. As long as money is still flowing into bonds it certainly is possible for Australians to bid houses back up and to blow the total mortgage debt balloon up again.
On the other hand, the most dangerous number is the 42% who are at double the price paid. If prices continue to erode despite increased access to financing, those owners might decide to cash out just to be sure to lock in their gains. There is no sticky there. They present a ceiling on this market unless it makes a definitive move upward with this interest rate drop.
Australia’s central bank, which reduced its key rate by a half-percentage point to 3.75 percent on May 1, will cut the benchmark to a record low 2.75 percent by September to bolster growth amid stagnant consumer sentiment, debt markets expect. About 90 percent of mortgage-holders have variable rate loans.That makes for quite a bit of excess cash for consumers.
Only 6.4 percent of homes across Australia were valued at less than their owners paid for them as at Dec. 31, while 41.7 percent were worth at least double their purchase price, according to RP Data.
Australia has had a cumulative shortfall of 186,800 homes since 2001, with the number expected to widen to 640,200 dwellings by 2030, the government’s National Housing Supply Council said in its State of Supply report in December.The discrepancy between the reported shortages and rents that barely move upward is hard to figure out. Rents are pretty reliable indicator for raw demand for shelter. I thought I'd look at the bios of the council members, but this is what it says: "Further details about the members will be included on the website shortly." I was thinking of the CMHC situation, where the board is overweighted with home developers. Well, a quick glance at googling the remarkably distinctive names of the council's board gives us an economist, someone working with vulnerable populations, then a land planning person, so hopefully not the CMHC situation.
I have to admit that the shortage numbers they report would seem to be untenable, resulting in visible social problems. And high rents. From the U.S. I can report that shortage is highly susceptible to speculative flipping leaving housing underutilized, and household size. Both of those can change rapidly. Average household size is far smaller than it used to be. That probably used to be two parents and two kids, but it's easy for it to return to a post uni kid and a grandparent along with those two near retirees.
I hate to harp on this, but again, this doesn't look like a trend in a country with a stunningly high shortage of shelter. Well, time will tell on this. As long as money is still flowing into bonds it certainly is possible for Australians to bid houses back up and to blow the total mortgage debt balloon up again.
On the other hand, the most dangerous number is the 42% who are at double the price paid. If prices continue to erode despite increased access to financing, those owners might decide to cash out just to be sure to lock in their gains. There is no sticky there. They present a ceiling on this market unless it makes a definitive move upward with this interest rate drop.
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