I hadn't seen this commentary posted here before so have pasted and linked below
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By Michael Matusik
Wednesday, 31 August 2011
Australia’s population growth has slowed by close to 150,000 in just two years, with a 100,000 drop in the actual growth rate over the last 12 months. As a result, the underlying demand for new housing has dropped from 180,000 starts per annum to around 125,000. While dwelling starts are declining, we are now building too much stock.
Unless new housing starts decline in earnest or population growth accelerates, Victoria, South Australia, Tasmania and the Northern Territory face an oversupply. Perth and Canberra are better positioned, with Queensland currently at equilibrium and New South Wales undersupplied.
Much of Victoria’s potential pain lies in Melbourne’s recent inner-city apartment boom, during which an unprecedented proportion of the state’s new dwelling starts are apartments. This mostly speculator-fuelled surge has provided some very misleading media headlines of late about the rise of apartment living and how it is becoming the new Australian dream. Yet two-thirds of Australians continue to buy a detached dwelling.
What?! This cannot be right. The housing industry and banking economists keep reminding us how undersupplied the Australian housing market is. Don’t we have a shortfall of something like 300,000 new homes across the country? And isn’t this shortfall going to double in size within the next decade?
But I ask you, with an average of 2.6 people per dwelling (as per the 2006 census), where are these 800,000-odd displaced people living? Yes, too many are living it rough, but 800,000 people equate to two cities the size of Canberra or one and a half of the Gold Coast. Where are all these people living? I don’t see thousands sleeping in cardboard boxes in Queen Street, for example.
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