In a report released by the HIA Economics group entitled Housing to 2020 it stated that we have a aggregate shortage of housing totalling 230,000. But what does that really mean? Surely we cant have a shortage of housing if prices are going down?
Blogger: Darren Standish, Property Prosperity
It you take the year 2010-2011 as an example the number of dwellings completed were 154,400. The HIA estimates that the underlying demographic demand for new dwellings in this year was 167,000. Thus they say that there is a 12,600 dwelling shortfall.
If we aggregate all these shortfalls over 10 years then we get the shortage of nearly 230,000.
So what is the underlying demographic demand?
Essentially it is the measure of the number of dwellings required to satisfy a growing population. This attempts to determine the total number of potential households in a given region based on a number of demographic, social and economic factors such as the natural population growth, net overseas migration and the number of people living under one roof.
It is important to understand that prices are made up of both the demand and supply of properties as well as people perceptions of the relative value of properties.
In the long run demand and supply will determine the final price in the market however in the short run it is peoples perceptions which determine the market price.
As such we can see falls in property prices when people perceive that property prices are overvalued, however as these perceptions aren't realized the underlying shortage of supply will have a greater impact and prices will start to rise.
About Darren Standish
Darren Standish established Property Prosperity in 2004 initially as a property development company, however after repeated requests for assistance the business evolved into a development consulting business.
Property Prosperity was initially focused on assisting clients with subdivisions and negotiating with councils to ensure that clients maximized their return on investment. Over the years additional services were gradually added to ensure the development process was as seamless as possible for its clients. We expanded into offering individually tailored finance solutions and then added Property Development Analysis, Property Sales and a Builder Broker Services.
Darren is the overachiever of the team and has more qualifications than your average university graduate. As well as completing a Bachelor in Economics, Bachelor in Commerce and post graduate in Accounting he subsequently went on to complete a Diploma in Financial Service, Diploma in Real Estate and Certificate IV in Building. He is a qualified Certified Practicing Accountant (CPA), a licensed Real Estate Agent, licensed Mortgage Broker and holds a Builders License.