Housing shortage and population growth
- Thread starter Telejazzer
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These things are easier to explain when I am drinking, I have moments of sanity then. I'll come back later in the week.
This is a great insight, especially the first two paragraphs, thanks for the post.
tcocaro, I agree with your comment that population growth has increased while new builds haven't, that is clearly indicated in my earlier linked post/table that shows on a new housing for new population basis we have been running a deficit (at least for the last 4-5 years), however we have been running a large surplus for years/decades prior to this. Consider that we currently average around 2.5 people per household and the overbuilding (prior to 2006) seems obvious to me when viewing the chart below. I guess the question then arises whether this stronger population growth has simply been a short term anomaly or a permanent change in our growth rate. Recent immigration statistics indicate it may have been the former.
Hobo-jo, your graph highlights exactly why i dont think there will be an enduring crash in property prices in australia.
Overlay your graph with US housing starts, it may show some interesting stats.
There could be a liquidity/financing crash in australia, if things get tough and unemployment goes up significantly, but it wont be enduring.
Your graph also highlights why the rental market is relatively tight in capital cities.
Even though property prices have increased exponentially over the last 15 years, there hasnt been an excessive increase in supply.
All these arguments to and fro are just further reinforcing my belief that residential property will just roughly stagnate (some years up, others down) on a medium term basis.
I think there will be a lot of disappointed property investors who have made their decision based on near term historical price performance, but i dont think there will be a sustained bloodbath.
tcocaro, I would be prepared to have a sensible debate, but your inability to even understand a couple of very simple statistics makes it very difficult.
Yes you are wrong.
I feel a little like I am banging my head against a brick wall here, but let me try again to help you understand.
If we have 8 new people added to our population, we build them 6 new homes and the average number of new people per home is 2.5... you are saying there is a shortage because the number of new houses is less than the number of new people without taking into consideration the number of people per household. 6 homes at a rate of 2.5 people per home means we could house 15 people, but we only have 8... that means there is an oversupply. Some of those homes will be empty.
I am aware of the difference between approvals and completions. In the start of the thread where I post the table I started using approvals but as I recall someone posted completions would be more accurate so that's what I used. RPData doesn't have an easy to reference completions vs population growth chart and I can't be bothered making my own. Both completions and approvals both show the massive over building that occurred prior to 2006.
The average number of bedrooms per dwelling is around 3.1 (ABS). I don't even know what point you are trying to make here... it's absolute nonsense! We are talking averages, 4 bedroom places are more likely to house a larger number of people per household than a 1 bedroom unit. So what? What bearing does that have on anything I've posted in this thread? Do you honestly think I've suggested somewhere in this thread that 2.5 people are cramming into 1 bedroom apartments?? That's ludicrous, I've said nothing of the sort.
http://www.refindhouseprices.com/
82,927 homes to rent, 4,930 Rent reductions in the past seven days.
6% reduced in the last 7 days.
How many rental inspections do you attend? Using the few examples you have and projecting your experience across the rest of the country seems pretty ridiculous.
The point was that rental vacancies according to SQM data are no tighter than they were 5 years ago, so it would seem the 'shortage' has not gotten progressively worse over this time...
I agree high prices are one reason, but we are both on a different page as to the cause so I don't see the relation... you claim prices are higher because there is a shortage, I say there is no (country wide) shortage and prices have been driven (predominantly) by easier credit.
Anyway, seems somewhat pointless debating anything with you. You can't even read and understand the simple graphs that have been posted let along provide logical statistics to backup this supposed 'shortage', not sure why I am wasting my time.
I agree. I don't think things will get to the level seen in some US states. I've said all along perhaps 15-20% max in nominal terms over a few years followed by several years stagnation...
ill make it simple given you conveniently ignored all points relating to your misreading of your own graph i.e. a drop in population growth to a number still higher than the number of dwellings being built is a shortage.
Your hocus pocus analysis is wrong made up by yourself and supported by no economist. You have made up your own determinations using fuzzy logic at best by grabing random ABS stats and applying them with huge assumptions.
For instance, the family unit size (seeking to buy) is NOT 2.5, the average dwelling size of newly built stock is NOT 3.1. I have never built a 3 bedroom apartment and ill take a stab that the 200+ units I have built is more than you have done. If it built 3.1 average ill be broke today as would most developers. The average size of of newly built apartments has been falling year on year and been discussed to death and something we constantly monitor to ensure we dont get caught out. But hey what do I know you your a developer too right?
Further more the approved dwellings also include government housing which reduces the available stock further. In addition your logic doesnt even include investors competing for this stock nor from the existing population i.e. kids moving away from home dont pop up as population growth mate! - damn your analysis is bad.
Your logic is based on these huge assumptions and its clearly wrong. Ill ask you outright and hope to get a YES/NO answer.
Does your logic take into account investors competing for stock? (Yes/No)
Does your logic take into account existing persons competing for stock (Yes/No)
Does your logic take into account that the average household size (in total) does not necessarily reflect the average family unit seeking to buy (Yes/No)
Does your logic take into account that the average building size (in total) does not necessarily reflect the average building size being built i.e. new stock (Yes/No)
Your logic is so flawed its amazing you keep posting in its support thinking just because you source ABS stats and check SQM that it gives your flawed interpretation of such stats credibility.
Vacancy rates are on average roughly 1.8% from memory nationally. This is a rise from previously incredibly low rates, 1.8% vacancy is still VERY low. I dont have to attend many rental open homes mate I just base it on raw data not extrapulated data twisted to some self created assumed analysis which you are so fond in doing. I can tell you think now you stand alone thinking this country doesnt have a tight rental market.
So what I suggest you do is keep hitting your head on a brick wall it seems its the closest you will get to investing in bricks and mortar.
Your hocus pocus analysis is wrong made up by yourself and supported by no economist. You have made up your own determinations using fuzzy logic at best by grabing random ABS stats and applying them with huge assumptions.
For instance, the family unit size (seeking to buy) is NOT 2.5, the average dwelling size of newly built stock is NOT 3.1. I have never built a 3 bedroom apartment and ill take a stab that the 200+ units I have built is more than you have done. If it built 3.1 average ill be broke today as would most developers. The average size of of newly built apartments has been falling year on year and been discussed to death and something we constantly monitor to ensure we dont get caught out. But hey what do I know you your a developer too right?
Further more the approved dwellings also include government housing which reduces the available stock further. In addition your logic doesnt even include investors competing for this stock nor from the existing population i.e. kids moving away from home dont pop up as population growth mate! - damn your analysis is bad.
Your logic is based on these huge assumptions and its clearly wrong. Ill ask you outright and hope to get a YES/NO answer.
Does your logic take into account investors competing for stock? (Yes/No)
Does your logic take into account existing persons competing for stock (Yes/No)
Does your logic take into account that the average household size (in total) does not necessarily reflect the average family unit seeking to buy (Yes/No)
Does your logic take into account that the average building size (in total) does not necessarily reflect the average building size being built i.e. new stock (Yes/No)
Your logic is so flawed its amazing you keep posting in its support thinking just because you source ABS stats and check SQM that it gives your flawed interpretation of such stats credibility.
Vacancy rates are on average roughly 1.8% from memory nationally. This is a rise from previously incredibly low rates, 1.8% vacancy is still VERY low. I dont have to attend many rental open homes mate I just base it on raw data not extrapulated data twisted to some self created assumed analysis which you are so fond in doing. I can tell you think now you stand alone thinking this country doesnt have a tight rental market.
So what I suggest you do is keep hitting your head on a brick wall it seems its the closest you will get to investing in bricks and mortar.
Truly incredible that you continue to harp on in this way.
Your argument = unless we build a new dwelling unit for every single new addition to our population then we have a shortage. Ridiculous.
1. (Investors). Irrelevant. It doesn't matter who buys it, because unless the investor intends on leaving it empty it will be made available to live in (as a rental). More stock = more stock whether it's a rental or available to buy.
2. (Existing persons). See above. Irrelevant. New construction vs population growth is simply a way of looking at whether we are increasing the stock sufficiently for new growth. It doesn't matter if existing buyers snap up new stock because they will be opening up the old stock from where they left.
3. (Household size of buyers). Why only look at those looking to buy? Doesn't make sense at all. Irrelevant again.
4. (New building size). FINALLY AN ACTUALLY RELEVANT QUESTION!!! Just because you aren't building large houses doesn't mean others aren't, I'm seeing a lot of 4x2s going up in the new developments.... I've only seen ABS statistics which indicate the increasing house size: http://www.smh.com.au/national/home...hen-it-comes-to-mcmansions-20091129-jyva.html
If you have statistics that suggest otherwise then do share? Otherwise you are arguing an unprovable case so it's a waste of time going any further.
Apparently it's my logic that's flawed
Your whole argument seems to be that demographics are changing at a fast pace, which just doesn't happen. It took 30 years for the average number of bedrooms to creep up to 3.1 from 2.8 and you seem to be implying that this trend has reversed, but offering nothing more than your own experience as proof (which is useless).
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HAHAHAHHAHAHAHAH omg your hell bent.... I am not continuing further because your more interested in being right. Thanks for answering my questions you couldnt even do that a simple yes/no. You should be a politician.
I will pick one of your points just to see show how clearly wrong you are!
Point 2.
E.g. Mother, Father, 18 year old son. Living in a house, son moves out looking to buy his first home.
Explain to me oh enlightened one how this doesnt reduce existing stock given you claim "It doesn't matter if existing buyers snap up new stock because they will be opening up the old stock from where they left."
whats left? a lived in house? do the parents dissapear?
seriously you dont think when you talk, you type banging your keyboard in your desperation to be perpetually right who are you fooling other than yourself.
In summary;
*I never said 1 new build for 1 new person (quote me please, lol) I simply stated you are claiming the opposite a straight mathematical equation that 2.5 is the number to divide by and your wrong.
*Your assumption is based on the premise only new population is looking to buy given existing population leave behind an empty house (lol) how wrong can you be!
*building size isnt irrelevant you donk. If only studios are built there is a massive shortage of appropriate buildings (lol) - think mate think, I know its hard.
yawn.. so obvious but I dont hold out any hope for you hobo-jo you still cannot even mutter silver price crash after a 30% drop how on earth will you admit ANY MISTAKE AT ALL here in this thread... you havent even made a single mistake here? not even a little one??? - lol you cant admit any mistake can you hahah truly laughable.
I will pick one of your points just to see show how clearly wrong you are!
Point 2.
E.g. Mother, Father, 18 year old son. Living in a house, son moves out looking to buy his first home.
Explain to me oh enlightened one how this doesnt reduce existing stock given you claim "It doesn't matter if existing buyers snap up new stock because they will be opening up the old stock from where they left."
whats left? a lived in house? do the parents dissapear?
seriously you dont think when you talk, you type banging your keyboard in your desperation to be perpetually right who are you fooling other than yourself.
In summary;
*I never said 1 new build for 1 new person (quote me please, lol) I simply stated you are claiming the opposite a straight mathematical equation that 2.5 is the number to divide by and your wrong.
*Your assumption is based on the premise only new population is looking to buy given existing population leave behind an empty house (lol) how wrong can you be!
*building size isnt irrelevant you donk. If only studios are built there is a massive shortage of appropriate buildings (lol) - think mate think, I know its hard.
yawn.. so obvious but I dont hold out any hope for you hobo-jo you still cannot even mutter silver price crash after a 30% drop how on earth will you admit ANY MISTAKE AT ALL here in this thread... you havent even made a single mistake here? not even a little one??? - lol you cant admit any mistake can you hahah truly laughable.
Truly incredible that you continue to harp on in this way.
Your argument = unless we build a new dwelling unit for every single new addition to our population then we have a shortage. Ridiculous.
1. (Investors). Irrelevant. It doesn't matter who buys it, because unless the investor intends on leaving it empty it will be made available to live in (as a rental). More stock = more stock whether it's a rental or available to buy.
2. (Existing persons). See above. Irrelevant. New construction vs population growth is simply a way of looking at whether we are increasing the stock sufficiently for new growth. It doesn't matter if existing buyers snap up new stock because they will be opening up the old stock from where they left.
3. (Household size of buyers). Why only look at those looking to buy? Doesn't make sense at all. Irrelevant again.
4. (New building size). FINALLY AN ACTUALLY RELEVANT QUESTION!!! Just because you aren't building large houses doesn't mean others aren't, I'm seeing a lot of 4x2s going up in the new developments.... I've only seen ABS statistics which indicate the increasing house size: http://www.smh.com.au/national/home...hen-it-comes-to-mcmansions-20091129-jyva.html
If you have statistics that suggest otherwise then do share? Otherwise you are arguing an unprovable case so it's a waste of time going any further.
Apparently it's my logic that's flawed
Your whole argument seems to be that demographics are changing at a fast pace, which just doesn't happen. It took 30 years for the average number of bedrooms to creep up to 3.1 from 2.8 and you seem to be implying that this trend has reversed, but offering nothing more than your own experience as proof (which is useless).
Hobo-Jo, I don't know that 15% is enough for demolitions? Houses last about 50years (at least thats what they are designed for), and need either a major refurb or replacement. Don't know what proportion go the latter or former but that is a lot of homes either way IMO you want to explore this area more robustly as it is a large component contributing to the nett change in the housing stock figure.
tcocaro, re: 18year olds leaving home this is a significant issue for utilisation but it always has been so is unimportant looking at it in isolation without a reason to point to as to why it has changed. You have to argue something has changed now for it to have any impact on utilisation rates when looking at such a graph. Now around this you could say a decade ago baby boomers are a demographic bump in the road and so are their offspring now 30 somethings for the most part. This bump of offspring leaving home would be starting to tail off now with the other bump continuing to retire to retirement style areas which I think everyone can see got overbuilt in anticipation of the continuation of the shift over the early part of last decade.
Is it possible that this demographic impact is one of the negative impacts conspiring on our market now? I don't think it is a significant one.
Anyway I am more interested in looking at these things state by state then they paint quite a clear picture of what is happening. Each states building boom looked at in isolation points to the weakness they each suffered later and they stick out like proverbial dogs *****. Sydney had a residential building boom around the olympics and suffered for it from 2003, Perth had one around 2005/6/7 and is suffering for it now. Melbourne has had one quite recently and indeed continues to now, and I suspect it will suffer for it.
When looking at a state in isolation building booms are quite obvious, often completions spiking to more than 50% above the long term average. Averaging over the whole market it is much less clear IMO. Look at Melbourne now, nearly double the completions of Sydney, for a while more than, Sydney, Brisbane and Adelaide combined. That is not sustainable...
Basically when the market price in a city is high enough to encourage building at unsustainable rates it is an unsustainably high price.
When price is not sufficiently high to encourage building and a city is undergoing population growth price is unsustainably low.
Through taxation of development or tax relief around development either of the above can be remedied by the government.
tcocaro, re: 18year olds leaving home this is a significant issue for utilisation but it always has been so is unimportant looking at it in isolation without a reason to point to as to why it has changed. You have to argue something has changed now for it to have any impact on utilisation rates when looking at such a graph. Now around this you could say a decade ago baby boomers are a demographic bump in the road and so are their offspring now 30 somethings for the most part. This bump of offspring leaving home would be starting to tail off now with the other bump continuing to retire to retirement style areas which I think everyone can see got overbuilt in anticipation of the continuation of the shift over the early part of last decade.
Is it possible that this demographic impact is one of the negative impacts conspiring on our market now? I don't think it is a significant one.
Anyway I am more interested in looking at these things state by state then they paint quite a clear picture of what is happening. Each states building boom looked at in isolation points to the weakness they each suffered later and they stick out like proverbial dogs *****. Sydney had a residential building boom around the olympics and suffered for it from 2003, Perth had one around 2005/6/7 and is suffering for it now. Melbourne has had one quite recently and indeed continues to now, and I suspect it will suffer for it.
When looking at a state in isolation building booms are quite obvious, often completions spiking to more than 50% above the long term average. Averaging over the whole market it is much less clear IMO. Look at Melbourne now, nearly double the completions of Sydney, for a while more than, Sydney, Brisbane and Adelaide combined. That is not sustainable...
Basically when the market price in a city is high enough to encourage building at unsustainable rates it is an unsustainably high price.
When price is not sufficiently high to encourage building and a city is undergoing population growth price is unsustainably low.
Through taxation of development or tax relief around development either of the above can be remedied by the government.
Tom, the problem is my posts on this issue is simply an attempt to show hobo-jo cannot simply grab 2.5 household size apply a quick division and determine there is no shortage. There is a myriad of factors that apply to HOBO-JOs analysis that make it wrong.
Your comments are true if I was applying my 18 year old leaving the house example against the markets understanding of shortage\surplus. However I was applying it to Hobo-Jos analysis to highlight his lack of understanding of interpretng stats and that its not as simply as grabing an ABS figure making a quick division and saying voila "no shortage". I hope you understand what I am trying to say here.
Your comments are true if I was applying my 18 year old leaving the house example against the markets understanding of shortage\surplus. However I was applying it to Hobo-Jos analysis to highlight his lack of understanding of interpretng stats and that its not as simply as grabing an ABS figure making a quick division and saying voila "no shortage". I hope you understand what I am trying to say here.
I think you need to take a look in the mirror Tim, every taunt you aim at me seems to be a more an accurate representation of yourself.
Asking me questions that I can only answer with yes or no?? What are we in the school yard or is this an adult discussion forum?? LOL
If I’m a politician then you’re the MSM journalist asking the irrelevant and leading questions to try and twist my words with your agenda.
That figure was one gleaned from an RBA speech, unsure if this figure has changed over the last 5 years:
http://www.rba.gov.au/speeches/2009/sp-dg-251109.html
last national count for demolitions was 18%.
This document outlines the issues in Sydney but has some estimate of future demolitions.
http://www.treasury.nsw.gov.au/__da...ding_Activity_Peter_Abelson_Sept_2010_dnd.pdf
this one also has demolitions recorded in it.
http://www.housing.wa.gov.au/Files/policy_hifg0510.pdf
2800 homes in that year demolished with a once off 300 odd, so call it 2500per annum that would mean more houses demolished each year in WA than they project for Sydney....I think the Sydney projection is a little low somehow.
Both seem low to me...
I would have thought all told the figure would be over 20% based on back of the envelope numbers based on the number of dwellings we had 50 years ago.
Maybe they built them better back then...
Anyway one thing I am quite certain of after looking at this is no one is really certain what number of homes we lose to demolitions each year.
http://www.nhsc.org.au/state_of_supply/2009_ssr_rpt/appendix3.html#tbl_a3
QLD was negative demolitions in the census. You would think that alone points to the data as being useless for all states. They then give it more weighting than the reported demolitions which surely would be more accurate but mostly a higher figure.
Probably best to just go with your 15% in retrospect!
http://www.treasury.nsw.gov.au/__da...ding_Activity_Peter_Abelson_Sept_2010_dnd.pdf
this one also has demolitions recorded in it.
http://www.housing.wa.gov.au/Files/policy_hifg0510.pdf
2800 homes in that year demolished with a once off 300 odd, so call it 2500per annum that would mean more houses demolished each year in WA than they project for Sydney....I think the Sydney projection is a little low somehow.
Both seem low to me...
I would have thought all told the figure would be over 20% based on back of the envelope numbers based on the number of dwellings we had 50 years ago.
Maybe they built them better back then...
Anyway one thing I am quite certain of after looking at this is no one is really certain what number of homes we lose to demolitions each year.
http://www.nhsc.org.au/state_of_supply/2009_ssr_rpt/appendix3.html#tbl_a3
QLD was negative demolitions in the census. You would think that alone points to the data as being useless for all states. They then give it more weighting than the reported demolitions which surely would be more accurate but mostly a higher figure.
Probably best to just go with your 15% in retrospect!
Hi hobo-jo
Earlier in this thread I posed 2 questions, one being
How does the building approvals chart support your conclusion in the same post and with such an over supply of housing from 1983 to 2005.
Which you answered in a reply to tcocaro
hobo-jo-"I am aware of the difference between approvals and completions. In the start of the thread where I post the table I started using approvals but as I recall someone posted completions would be more accurate so that's what I used."
I agree it is better to use accurate figures.
The second being why have prices far exceeded CPI when we have had a massive oversupply for 23 years?
Earlier in this thread I posed 2 questions, one being
How does the building approvals chart support your conclusion in the same post and with such an over supply of housing from 1983 to 2005.
Which you answered in a reply to tcocaro
hobo-jo-"I am aware of the difference between approvals and completions. In the start of the thread where I post the table I started using approvals but as I recall someone posted completions would be more accurate so that's what I used."
I agree it is better to use accurate figures.
The second being why have prices far exceeded CPI when we have had a massive oversupply for 23 years?
I wouldn't say oversupply is massive in all areas. I think we have well over built and well under built in different areas (under building is driving legitimate shortages in some Sydney areas).
Ultimately even if we are 400,000 houses over the mark (and it's likely the number is less than that, the table doesn't account for everything) that's only around 5% over the mark (400k/8m total).
I wouldn't say it's definite proof of oversupply, but I think it's a good measure to show that the "shortage" is a myth. A lot of commentators have referred to the gap (between pop growth and new housing) over the last 4 years when talking about the shortage without considering what came before it.
There was an oversupply in the US before their bubble collapsed, what kept prices up there?? The answer has been posted on this forums by Sunfish (and evand if I recall) several times in the last few weeks, it's not fundamental drivers that have pushed the markets to these heights, it's availability of credit and sentiment.
Agreed. House prices will crash as soon as the credit tap is turned off. Sentiment has already turned extremely negative.
Not sure if credit will be 'turned off'.
http://www.news.com.au/money/bankin...ce-to-the-bottom/story-e6frfmcr-1226070652292
Of course, I wouldn't be betting actual money based on an article like that, but it will be interesting to see what happens.
What's the demolitions figure for Aaron?
If looking at total stock v requirement you need to know current stock, new buildings and future building but take away demolitions.
I was trying to find information about it and it was not really flash the records I found. Aarons 18% is likely similar for other areas, but this is not dissimilar to hobos assumption of 15%.
It will make a material difference over several years though to the total percived overhang or undersupply of stock.
It would seem better records are kept of building activity than houses abandoned due to age or demolished to make room for several apartments etc.
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