Housing flips into oversupply: it’s official



3 July 2012

ABS Census data just released shows 1.1 million fewer households and 595,000 fewer houses in Australia than previous estimates; Morgan Stanley researchers calculate Australia now has a 341,000 OVERSUPPLY of houses.

The Census revision obliged National Housing Supply Council chairman Owen Donald to recant recent NHSC calculations of a 228,000 dwelling undersupply in today’s Australian Financial Review. Prosper does not criticise Dr Donald for the error, based as it is on official data.

“I think we just run out of government agencies in denial about Australia’s land bubble,” Prosper Australia Campaign Manager David Collyer said today.

“There is now no support for the views of the property industry, nor any reason to stimulate house prices to overcome ‘shortages’.

“The new Census data affirms the 90,000 Melbourne houses identified empty in Earthsharing’s Speculative Vacancies Report released two weeks ago.

“A massive pipeline of new construction was prompted by a decade of strongly rising prices. Developers responded to the big profits on offer by accelerating their activity. Nationwide, there are now 380,000 houses sitting unsold on the market, plus a shadow inventory at least as big.

“Over the last five years, young adults also reacted rationally to high housing costs by widespread communal household creation, or living with their parents, and abandoning home ownership as a personal objective. House prices have decoupled from rents – a key measure of objective value.

Potential homebuyers are deliberately standing aside or have been refused bank loans.

“Either way, first home buyers are absent. And they are the single most important source of new capital into housing that enables others to trade up or exit. Only a significant change in housing affordability will reengage them.

“The current economic settings – profound housing oversupply, debt aversion, unsustainable affordability metrics – must keep the property industry and negative gearers awake at night.

Collyer reaffirmed Prosper Australia’s forecast of 15 per cent price falls this calendar year and possible 20 per cent falls.

“With the year half gone we are exactly on track to fulfil this dour prediction,” Collyer concluded.

Don’t Buy Now!

Media Contact: David Collyer 0413 248 193

About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise to capturing the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax.

12 Comments

  1. Serenco03-07-2012

    jeeze we can only hope for 15% but might be a bit much (maybe if you count real prices rather than nominal). definitely see 15% by end of next year as a minimum.

  2. karl03-07-2012

    im just a little confused david-what is the normal oversupply meant to be in a normal market,like 341 000 oversupply with 7 and half million people doesnt seem that much considering people also have holiday homes

  3. karl03-07-2012

    i have also read that house prices are only down less then 2% since january,what make u think it will suddenly snowball in the next 6 months to 15 or 20%..i very hope u are right but the number of un used houses doesnt seem that much too me but i could be wrong

  4. David Collyer04-07-2012

    Hmmm. What constitutes a ‘normal’ market? We haven’t seen one of those for years. There will always be a certain level of stock available for sale on the market. It is an observable fact this metric has grown considerably and in expected to keep growing as potential buyers refuse the hurdle.

    sqmresearch.com.au has a handy measure in their ‘Stock on Market’. Check your postcode.

  5. David Collyer04-07-2012

    Karl, be careful what you read. The only reliable measure of house price change is the ABS. http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0
    Unfortunately, this is a lagging indicator derived from state Valuer General data recorded at settlement, so is ~5 months late.

  6. Rich04-07-2012

    Hi David,

    Do you know the name of the MS piece about the oversupply?

    R

  7. Rich04-07-2012

    actually i found it. Dont worry. Census is non consensus 29th July

  8. karl05-07-2012

    im just wondering as a state as a whole what the housing shortage is in west oz

  9. Karl Fitzgerald
    Karl Fitzgerald06-07-2012

    read this post to see how the undersupply is now an oversupply in all of Oz. I am sure real estate is being held for ransom in WA. I hate to think what is happening in mining towns. One day we’ll have the resources to do the study over your way too.
    http://www.earthsharing.org.au/2012/07/03/housing-oversupply-evidence-builds/
    http://realestate4ransom.com/

  10. Mark08-07-2012

    Karl,

    Do you have any stats for oversupply housing in Queensland?

  11. karl11-07-2012

    sorry,i dont have any stats on oversupply in queensland..im thinking of buying a 3 bedroom dumpster in a perth subberb of medina for about 3x average wage-its a low income area so i wont pay more then 130 000,because im thinking its cheaper to pay mortgage on that then the rent i pay at the moment-if it does fall im thinking it wont fall that much compared to lets say buying something 400 plus..andthere seems to be a real rental shortage and im scared being thrown out on the street,dont get me wrong i think the rental shortage is because people are selling so many houses without people in them(they keep them empty so easier too sell)but they are not selling but people still need somewhere to live

  12. karl11-07-2012

    sorry i forgot to ask-do u think this is a wise move or wait because i know thousands are comming into wa every week because of work

Leave a Reply

*
*

https://prosper.org.au/2012/07/03/housing-flips-into-oversupply-its-official/