Expert says houses are not going up fast enough
Supply of housing stock could take up to a decade to catch up with demand according to CoreLogic research analyst Kelvin Davidson, who says increasing supply will be the only real way of cooling explosive house price growth.
Davidson says that the government is unlikely to implement any tools that will have an immediate or marked effect on house prices, however, he says that a promising trend towards smaller dwellings and townhouses is emerging. Despite this, he says it may take five to 10 years for supply to come close to catching up with demand, as houses are simply not going up fast enough.
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“In terms of the property market, it’s going to be difficult to do much on the demand side immediately,” Davidson commented.
“The government is talking about extending the bright-line test but I’m dubious about that, because all it might do is stop people from selling.”
“People who might have ordinarily sold their properties may then decide to hold on to them for 10 years to avoid the tax, so it might actually cause listings to get even tighter because nobody wants to sell,” he explained.
“So there is a limited influence that the government can have, so the key thing that could make a difference would be to try and get more houses up.”
Davidson says it’ll be all about increasing the supply of physical houses and the stock on the market, and, at the moment, both of those things are fairly low on the ground.
“You can’t really create that supply overnight, so it’ll be about doing anything we can do to make more houses available,” he said.
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“There is already a change underway towards things like smaller dwellings, and townhouses are taking a higher and higher share compared to the big standalone dwellings. That kind of intensified housing stock is a good thing, smaller dwellings definitely make sense, so we’ll likely see more of those coming up.”
“But that’ll take a number of years – I’d say it’ll be 5-10 years before we see supply catching up with demand,” he added. “So we really do need to keep it up.”
