Issue 6 | March 12th | The Growing Demand for Housing
Hi, Andrew Bell here and what an interesting world we are living in.
How quickly the news coverage has jumped across variations platforms. The second half of last year saw a huge focus on our drought, the attention then switched to the fires pre and post-Christmas, and then through to incredible rainstorms and associated flooding’s of early February. Now, the focus is on the Coronavirus.
A fascinating situation. It is interesting to see that more than 600,000 people die each year from Influenza and hardly anything is ever mentioned of it, yet the Coronavirus has received so much attention. The media is certainly playing a part in building up the frenzy but it is a warning to us all that these types of virus’s are probably something we are going to encounter on a more regular basis moving forward.
From a real estate perspective, we are seeing no real signs of the virus having any impact other than the fact a few more sellers have decided to bring their property to the market earlier than they would have otherwise. We are still recording incredible buyer demand and last week’s drop in interest rates will only fuel even greater buyer interest.
However, there is an underlying issue that is constantly in play at present. Housing construction has slumped at its fastest rate in 19 years in the final three months of 2019, and total home-building fell 4.6% in the December quarter. It was the sixth straight quarter that housing construction has shrunk.
There are two aspects to housing construction. One is that it is a major contributor to economic growth. Pleasingly, we saw in figures released just last week that the Australian economy has been building with growth rising from 1.8% to 2.2%. This is great news, but one wonders how much more the economy would have grown if housing construction had been stronger.
The real issue of lower housing construction is that we are not building enough properties to meet our population growth and this is going to continue to put upward pressure on real estate prices as we will continue with the situation of more buyers than sellers.
Another frustrating situation for buyers is the latest stats are also showing that people are staying longer in their homes, which means there are less properties coming on the market for sale. Ten years ago, on average people held their properties for just over seven years, but that has increased with the average tenure in a property now being around eleven years. That just means there is less turnover so there are less properties on the market all the time.
This situation is unlikely to change anytime soon and so buyers can expect to be faced for years with a smaller selection of properties and a need to move swiftly when they seek properties they like. It is also going to put a strong floor in real estate pricing.
It is an ever-changing world, but one thing never changes and that is that everyone needs a place to live. With our rental market here on the Gold Coast currently at record low vacancy, there is a small selection of properties for people to rent. This is at the exact same time that there is the least amount of properties on the market for sale. I really feel for people in their housing needs, whether it is a tenant or a purchaser, because diminishing availability can put added stress in satisfying their housing needs.
If you have a rental property there is no one better to look after it than us. I want to congratulate our Residential Property Management team who were recently recognised by Ailo, a purpose-built customer feedback platform for property management, with the Customer Satisfaction Leader Award for the December 2019 quarter. I could not be more proud of the team.
There is just over two weeks to go until our great Business Meets Sport lunch and we can announce a couple of our speakers as being Geoff Wilson – Polar Explorer, Pete Evans – Internationally Renowned Chef, and Ali Day – World Ironman Champion. Please contact Selena Carson on 0410 650 185 or at firstname.lastname@example.org to purchase seats for you and your friends, or a Corporate table.
Make sure you have a look at Chevron One, a fantastic development on Chevron Island that is undoubtedly in pole position on the Island, and upon completion will be the pick of residential living on the Island.
That is all for this fortnight. Let’s really support one another in these constantly volatile times that we live in.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group