New research shows Australia has a housing oversupply – but it’s not dragging down prices.
The ANU report suggests there may be up to 164,000 surplus dwellings currently unoccupied around the country.
Large parts of Australia have more houses and units than people need. This finding comes in the form of a new analysis by two Australian National University academics who tracked changes in the housing supply and in the number of people per household using Census data from between 2001 and 2016 to determine where housing surpluses and shortages appear.
Viewed nationally, every state and territory save Tasmania has a surplus of dwellings.
At a city level, large parts of Melbourne, Sydney and Brisbane have serious oversupplies of housing. The report attributed this to "recent strong growth in unit developments." Certain regional areas, such as Kimberley, also have significant surpluses.
A study of population, dwelling and household types
In terms of methodology, the researchers took 2001 as a baseline and used Census data from that year until 2016. They tracked changes in the number of people per household in Census figures, adjusting to account for various types of households. They also factored in population growth to more accurately gauge supply and underlying demand.
But what does this all mean?
Policymakers and economists often talk about supply and demand as the driving growth factors for property prices. But this research suggests that supply, which appears to be more than satisfying demand, hasn't translated into lower prices for homebuyers.
This lends credence to the argument that other factors, such as over-generous tax concessions, speculation by investors and the easy availability of financing, have caused surging prices.
But the research isn't entirely a story of surpluses. Many areas, especially in outer-city suburbs and in regional Australia, have shortages of housing stock. Unsurprisingly, many regional areas with strong housing surpluses are those with strong mining industries.
Given the fluctuating nature of this industry, the researchers warn that "caution should be taken in interpreting data from these regions."
The debate over property prices will rage on, regardless of whether they grow or decline. But the implications for the property market and policymakers are clear: demand is complicated, and simply meeting supply doesn't guarantee a reduction in property prices.