Okay, I admit I have been totally wrong. I agree house prices will now rise forever (let alone crash) because our houses are getting bigger as more kids now stay at home. Wait a minute...I am confused...maybe I won't agree just yet.
Anyway, that's why despite a severe housing shortage, migrants have no problem finding houses to buy or to rent (even Craig admits some landlords in Sydney are reducing rent). Hmmmhh......but why reduce rent ???
Of course, the hundreds of thousands of folks whom you would expect to find sleeping on the street in fact comfortably sleep in their hammocks across the nation's parks. That why Craig couldn't find them. All he had to do is look up.
Just how tight is the housing market? Over the last year Australias population rose by 440,000 people the biggest increase on record and the largest percentage increase in 40 years. The number of migrants increased by more than 285,000 people. But dwelling commencements only rose by just over 131,000. On this basis you would have expected more people to be on the streets and for the rental vacancy rate to approach zero. But it didnt happen. In fact some Sydney landlords complained that they had to reduce rents or offer rent incentives.
CommSec found that Australia is building the biggest homes in the world, but at the same time there is new evidence that household size is increasing for the first time in at least a century, or perhaps since European settlement.
The debate about housing costs and supply will go on in 2010. There is no doubt that rising housing costs are causing children to stay longer with parents and for more young people to share accommodation. State and territory governments have to pay more attention to produce more land, reduce costs for developers and revisit zoning laws.
CommSec expects home prices to rise by 8-10 per cent over 2010. Population continues to grow and not enough homes are being built. For investors, rising rents and home prices is an attractive combination.
