This week’s biggest property related story was probably BIS Shrapnel’s release of their three year forecasts for property prices. Within the release they forecast that capital city price growth over the next three years would range from 11% in Darwin to 19% in Sydney, Melbourne and Adelaide. Their forecasts have come in for much criticism however the forecasts reported by the media did not take into consideration the fact that these figures include inflation.
Although many have suggested these forecasts are quite bullish, in real terms we are talking about increases of between 5% and 9%. The media headlines also don’t mention when in that three year period the growth will happen. I don’t think anyone would believe the next year to year and a half will see strong price growth given the economic climate but given the undersupply of dwellings in Australia and the cyclical nature of our market it may be the case that property prices will rebound in the second half of the three year period.
Dwelling commencements data was also released during this week with the statistics showing that the trend estimate dwelling commencements for the March 2009 quarter fell by 8.5, following an 8.4% fall in the previous quarter. Many economic commentators as well as Government Departments have highlighted Australia’s ongoing shortage of housing estimated to be somewhere between 40,000 and 80,000 too few dwellings. In order to cater for our booming population it is imperative that dwelling commencements improve to provide housing for those in need and to minimise affordability issues that arise due to this shortage. Given this result it is unsurprising to see Government incentives for purchases of new houses however, it may be more effective to slash the restrictive charges on new development and inject money into the timely deployment of critical infrastructure in and around these new housing areas on the outskirts of our capital cities.
Locally there is a great need for more stock. There are few homes available under $300,000 and some agents are starting to get up to old tricks. Poaching listings from other agents is one tactic that some agents employ. Although illegal, it doesn’t stop some of the unscrupulous agents doing it anyway. The problem with the governing Act is it is not enforced. many consumers are unaware of their rights, and the Department enforcing the law is a toothless tiger.
