2006 census says there is NO SHORTAGE

[HiredGoon]

here is the 2006 Census:

http://www.censusdata.abs.gov.au/AB...od=2006&javascript=true&navmapdisplayed=true&

The number of people in Australia increased from 18,769,249 to 19,855,288 . A total of: 1,086,039 new people

We are going to assume that every new person is going to buy an average amount of houses, but the "house buying demographic" 25-54 increased from
8,376,751 to 8,159,808 or only 216,943 people. So we'll use the total, because it is the larger number.

At 2.6 people per house (average household size in both 2001, and 2006) we can work out the new fundamental demand for houses is 417,707.

The number of houses went from 7,790,079 to 8,426,559 an increase in 636,480 new houses built.

This means that there were 35% more houses built in the last 5 years than needed to keep 2.6 people per house.

The number of NEW OCCUPIED dwellings rose by 523981. This means that on average, of the houses built since 2001, only 80% of them have become occupied.

830 thousand, or 10% of the total housing stock is empty.

There is quite obviously no shortage of houses to HOUSE people. But prices rose, which indicates that demand > supply. The only answer then is that demand has increased beyond the need for people to house themselves.

There's not a supply problem, there's a DEMAND problem - everyone wants to get rich buying houses and they don't care how small the yields are, they are buying for capital gains. This is a classic mania forming an economic bubble.

 

[topcropper]

Plenty of empty houses on farms where farm workers once lived. Plenty of empty houses in little villages in the bush. I'm in an electorate that is about to be dumped due to declining population. Lots of rich people own holiday houses, or a second house, or a holiday unit that they don't need to rent.

What's your point anyway?

See ya's.

 

[emu]

Doesn't anyone over the age of 54 have a house built for them..........or should that be two units built to match the divorce rate for that age group (50-60)

 

[HiredGoon]

It is not just the country and holiday homes. Yes, a LOT were holiday homes, as 35% overbuilding for the whole country is much higher than the ~20 or so overbuilding in the capitals.

This is the percentage oversupply of houses built since 2001 to keep new immigrants and births at 2.6 to a house.

Total housing stock oversupply over fundamentals as a percentage of total new builds since 2001:

Sydney 32.1
Melbourne 22.8
Brisbane 6.7
Perth 18.8
Adelaide 31.8
Hobart -4.0 (real shortage)
Darwin 109.4 (had negative growth but built houses)
Canberra 43.0

Wonder why number of homes being built is in decline?

The number of people per house on average has remained at 2.6 since 2001. So divorces, number of singles etc do not matter, we are talking about average occupancy here, so they ARE ALREADY included in the stats.

 

[Tim]

HiredGoon,

your numbers don't stack up - the total amount of dwellings being constructed is less than demand for dwellings by around 17% according to commonly cited HIA figures.

Probably what you mean is that you can get a better yield by waiting for prices to drop. Many people invest by doing nothing and waiting for property prices to drop - they think that is smart.

If say if property prices drop >30% then I can buy that beach home!

Tim

 

[skater]

Hmmmm............plenty of empty houses bought by developers awaiting DA approval for their next development. Plenty of empty Housing Commission houses awaiting either renovation for new occupants or to be sold privately. This usually takes them in excess of 6 mths for each one where I live & they are selling a couple every week. I don't live in a regional town either.

So..... multiply that by every city in the country & you soon get a heap of vacant property.

 

[HiredGoon]

This is government data from the ABS. This is a very simple formula

new people / 2.6 = new houses required.

How does the HIA come up with their figures?

I said that demand > supply (probably 17% as you claim) but my claim is that this demand is not based on population, but by mania and speculation.

Darwin prices BOOMED but they've had NEGATIVE POPULATION GROWTH! Please explain that!

 

[yo yo ma]

HG
You forgot to factor in the Japanese fish prices, which does alter your figures somewhat...
http://www.globefish.org/index.php?id=3889
Maybe you should try some Fugu?
http://japanesefood.about.com/cs/seafoodfish/a/fugublowfish.htm
Steve

 

[Dis]

If there is such an over supply why are rents going up so much? There are alot of renters for each decent house coming up. I'm sure all those greedy investors aren't sitting on empty houses for kicks.

This means that there were 35% more houses built in the last 5 years than needed to keep 2.6 people per house.

Since the average number of people per household is decreasing, it would be logical to assume alot of the new housing stock would be aimed (on average) at smaller households. There is alot of housing stock on the market already to cater for 3-4 people families.

 

[HiredGoon]

If there is such an over supply why are rents going up so much?

Rents have increased by 75% of wage growth over the last 5 years (31% over 5 years)

Rent is sometimes less than 1/2 the cost of interest-only on the same place. This is because rent is driven by fundamentals, while prices are driven by speculation and credit conditions.

Since the average number of people per household is decreasing

The average person per house was 2.6 in both 2001 and 2006 (I already said this)
The average person per bedroom was 1.1 in both 2001 and 2006.

 

[Simon]

Rents have increased by 75% of wage growth over the last 5 years (31% over 5 years)

Rent is sometimes less than 1/2 the cost of interest-only on the same place. This is because rent is driven by fundamentals, while prices are driven by speculation and credit conditions.



The average person per house was 2.6 in both 2001 and 2006 (I already said this)
The average person per bedroom was 1.1 in both 2001 and 2006.

There is huge demand here and <1% vacancy rate. Rents are rising strongly. I thought it a simple case of supply and demand despite there being the fastest growing area of the state to our immediate west.

What fundamentals do you think are driving the Newcastle rents?

 

[HiredGoon]

There is huge demand here and <1% vacancy rate. Rents are rising strongly. I thought it a simple case of supply and demand despite there being the fastest growing area of the state to our immediate west.

What fundamentals do you think are driving the Newcastle rents?

There may well be a shortage of houses for rent in certain places. Can you do the maths on the rental figures to prove it? Data is on http://www.abs.gov.au

Two of my friends were kicked out after only a 6 months lease when the landlord decided to renovate and sell before the July super contributions deadline. The property didn't sell and is currently sitting empty.

As was the terrace next door to my previous one. It is being renovated part time (over months) by the LL who is doing it up to sell. They're not even bothering to rent it out as the yield is so low. Why use a house as a shelter for humans when you can use it to get rich?

 

[Bandita]

Rents have increased by 75% of wage growth over the last 5 years (31% over 5 years)

Rent is sometimes less than 1/2 the cost of interest-only on the same place. This is because rent is driven by fundamentals, while prices are driven by speculation and credit conditions.



The average person per house was 2.6 in both 2001 and 2006 (I already said this)
The average person per bedroom was 1.1 in both 2001 and 2006.

I'm still not understanding what your point is?? Not to buy property? Ok, then don't!

If you point is to scare us out of buying property so that the prices come down so the affordability goes up - good luck, the majority of property is owned by owner-occupiers, NOT investors. OO are not driven by speculation, credit conditions, etc. They are buying their home, their future life, they will pay what they want for that luxury, and they're not going to sell up because there's some people screaming doom and gloom or a property boom.

If you're point is to convince us that property is a bad investment - the past 100 years of property values tell us otherwise. Yes, there are ups and downs, but you'll find the majority of investors here are in it for the long haul. We're not looking to make a fast profit, we have found an investment vehicle with long term capital growth opportunities, the ability to leverage to greatly increase our equity (or loss), great tax breaks along the way, and income to help hold the asset. In fact most investors here are planning to hold for many many many years (you'll often see "never planning to sell" in the posts) so they could care less about fluctations in the meantime, it's what happens in markets and if you wait and wait for that huge crash (which usually just brings it back to past few years value) - you'll be waiting forever!

How long have you been waiting? How much equity have you missed out on waiting and waiting, dooming and glooming? Perhaps you're upset at the amount of capital growth you've missed out on waiting and waiting and that's why you're attacking this forum? Or you're so convinced you're right, 50 years from now you'll still be waiting......

I honestly can't work out what your point is, but have you ever looked into the positives of property investing? The leverage, tax benefits, capital growth?? I have seen your posts on the negatives, and yes they exist. But we have all found the postives so far and beyond outweigh the negatives that it's not worth spending the effort fighting the reality of it all, and just accept that what is, is.

I'm not trying to attack your views, I just think you must have missed the boat so many times, you're sure it's coming back to shore.......

Cheers,
Jen

 

[HiredGoon]

I'm still not understanding what your point is?? Not to buy property? Ok, then don't!

The mainstream media, and common view is that there is a housing shortage. I hope I have shown that there isn't. That's all my point is.

I don't care if you buy property, so long as you just displace owner occupiers on my tax dollars!

OO are not driven by speculation, credit conditions, etc.

Credit conditions don't affect OOs?

Speculation DOES affect OOs, they have to compete with investors, and also buy even though renting is significantly cheaper on the expectation of capital gains.

OOs overpaid to compete with house flippers in the USA and they're seeing falls. OOs are overpaying now in Australia.

How long have you been waiting? How much equity have you missed out on waiting and waiting

I am mid-20s, and have been in a position to buy for approx 1 year. I rented a terrace for 1/2 the cost of buying in Adelaide city last year. Terraces in Adelaide city saw price falls last year, according to real estate SA (though I don't trust those figures).

According to those figures I saved 10k in interest and 45k in price falls.

I honestly can't work out what your point is, but have you ever looked into the positives of property investing? The leverage, tax benefits, capital growth??

Yes, my parents owned IPs (they sold 1 and are now debt free). I am not against investment properties, I am against the government giving my tax dollars to other people so they can displace owner occupiers without providing any net new shelter (94% of property investors who don't build anything)

I do intend to buy a house, but at a better time than now. Now is a terrible time to buy IMO.

There is a mania in mainstream society that "property always goes up, there is a huge shortage, etc etc" it is spewn forth from the mainstream media. I hope to use maths and facts to get the actual truth out there.

I rent a house for 1/35th of it's value for a year. This means I can save at least 10-15k MORE for investing in other places vs buying each year while having a significantly better quality of life. I have calculated what would have happened if I had bought my current house last year (not the terrace in the city, and not counting transaction costs or maintenance) vs continued to rent. I am slightly behind, but that is only because I don't use leverage in my other investments. I would be FORCED to use 90% leverage to buy a house. A 10% correction would wipe me out.

 

[alexlee]

You know, the thread actually makes a lot more sense if you put them on your ignore list!

If there's no shortage, someone forgot to tell my tenants because they're accepting rental rises without one word of complaint!
Alex

 

[Dazz]

I rent a house for 1/35th of it's value for a year. This means I can save at least 10-15k MORE for investing in other places vs buying each year while having a significantly better quality of life.

HG,

Your ilk are a perfect example of why we don't invest in assets to provide a roof over you heads. 1/35th indeed....and that's gross - not nett.

We're very happy to let other Landlords with more money than us support your "better quality of life". Chin chin !!!

 

[Dazz]

I apologise to all, I've had PM's pointing out that I'm feeding a troll, and I agree, so that's the last you'll hear from me. Ta ta.

 

[Bandita]

I don't care if you buy property, so long as you just displace owner occupiers on my tax dollars!

I am not against investment properties, I am against the government giving my tax dollars to other people so they can displace owner occupiers without providing any net new shelter (94% of property investors who don't build anything)

So let me get this right - you dislike negative gearing and property investors who don't build new homes because they receive tax benefits which keep the rental price way done, hence allowing you to live in a nice home and save for your own investments.......and yet.....

I rented a terrace for 1/2 the cost of buying in Adelaide city last year.

I rent a house for 1/35th of it's value for a year. This means I can save at least 10-15k MORE for investing in other places vs buying each year while having a significantly better quality of life. I have calculated what would have happened if I had bought (not counting transaction costs or maintenance) vs continued to rent.

So you're biting the hand that feeds you - yet fighting for the people who are the MAJOR controller of rising house prices - owner occupiers?!? It's not investors who drive the price up - it's owner occupiers. It's investors and "your tax dollars" (even though it's actually their own tax dollars that they're getting back) that keep renting affordable.....

But, of course, your understanding and research of property investment, negative gearing, and the general property market must be very well founded as....

I am mid-20s, and have been in a position to buy for approx 1 year.

Again, i'm not trying to attack your views - but you keep attacking negative gearing, which is why your rentals are SO cheap! It's not your tax dollars, it's the investors own tax dollars they are getting back (if you have negative income, the tax office doesn't give you money back!!) Your logic doesn't make sense - these investors aren't making majical money back from the governemt, they're getting, at most, 45% back of tax they've already paid on money they have spent for their investments - so, in the end they are adding at least 55% more to the economy than if they hadn't invested at all.

Cheers,
Jen

 

[Dis]

Rents have increased by 75% of wage growth over the last 5 years (31% over 5 years)............This is because rent is driven by fundamentals, while prices are driven by speculation and credit conditions.

Your 31% growth is rent across the market. It does not represent the rent an individual investor is getting on an individual property. 21 months ago my wife rented her IP for $205/wk. 9 months ago she rented it out for $230/wk. Now the rental estimate is $250/wk. When its time to renew the lease, the rent is likely to be around $260. Its never vacant more than 1 week between tenants and thats not due to an exceptional PM. That a 25% + increase over 2 years. The property has had 2 years of wear and tear so they are getting a worse property now than 2 years ago.

If you are saying most IP investors are speculating on capital gains and it is not even worth renting out because yields are too low, it would be reasonable to assume that they are not buying IP's based on a minimum acceptable yield. Instead they are buying and approaching their PMs to see what market rent is. Renters are dictating market rent, and right now there is enough competition for me to be seeing rents dramatically rise (on a walking the pavement level).

Two of my friends were kicked out after only a 6 months lease when the landlord decided to renovate and sell before the July super contributions deadline. The property didn't sell and is currently sitting empty.

You mean that speculators weren't prepared to buy at any price?

It is being renovated part time (over months) by the LL who is doing it up to sell. They're not even bothering to rent it out as the yield is so low.

Maybe the reason he is not renting it out is because he can't (while renovating) - nothing to do with yield. Maybe he is doing it himself because he saves some money in doing so. This has nothing to do with the market value of the property. It has everything to do with the weekly rent (which you say is appropriate as it is based on fundamentals). The rent doesnt cover the extra cost of hiring professionals to do the job quicker.

 

[HiredGoon]

Rents have risen in line with wages, but prices have jumped because of high debt levels. I don't think that negative gearing keeps rents low compared to prices. I think rents are where they should be and negative gearing allows investors to service a higher debt level and hence push prices up.

When Keating brought back negative gearing in 1987, did rents go down, or did prices rise?

PS landllort = anagram for land troll.