All right. So, are we ready to dive into this Australian housing market? I mean, let’s be honest. Whether you’re looking to buy or sell or even just trying to keep a roof over your head, things are a little well intense at the moment.
Yeah. No kidding. And the thing is, it’s not even just about those rising prices, though. We’ll get to those for sure. But it’s like there’s this whole chain reaction happening underneath, you know, like all these different forces kind of pushing and pulling on the market all at once.
Exactly. I mean, we’re talking Sydney medians pushing $1.2 million according to domain and core logic. That’s almost enough to make your eyes water a little.
Yeah. And it’s not just Sydney either. It’s like a nationwide trend really. And one of the biggest things if you ask almost anyone is affordability or should I say the lack of it. It’s just wages, they just haven’t kept pace with these skyrocketing prices. You know, it’s tougher than ever to get on that property ladder these days.
Yeah. Okay. So far so good, right? I mean, prices are high, wages are lagging behind. We’ve all heard this story before. But here’s where it gets a bit more interesting, right? Um because the reports from REIA, they’re showing that even with all of that speculative demand is still incredibly strong.
It’s like everyone’s in this high stakes game of chicken with the market, people are practically betting on those prices just keep climbing higher, so they’re holding on tight or even jumping in head first.
Yeah. Talk about FOMO, right? Fear of missing out. But on a national scale, I mean, I’ll admit even I’ve felt that little hang of should I be getting in on this?
Yeah, I mean it’s understandable that feeling of urgency. And what’s so interesting is even with the RBA, you know, increasing those interest rates to 4.1%. To try to cool things down a bit, that confidence, that speculative kind of fear, it’s like it hasn’t really gone anywhere.
So even though borrowing money is way more expensive now, some people are still willing to take that plunge
for a certain part of the market for sure. They’re banking on those long-term gains, particularly in those, you know, prime locations that everyone seems to be after. But yeah, it’s a gamble. No doubt about it.
And of course, we can’t forget about good old population growth. More people means more competition for that limited supply of housing.
Precisely. The ABS, they’ve got us blowing past 26.6 million people already in their projections. They’re saying a whopping 41 million by 2061. That’s a whole lot of new Australians who need a place to live, right? Okay. So, more people want a slice of the pie. That makes sense. But it’s not just the overall numbers, is it? It’s like The type of households are changing too.
You were telling me, yeah, ABS data is also showing that the average Aussie household size is actually shrinking. More single person households, more couples are choosing to have fewer kids. Even those multigenerational living situations, they’re on the up. So all of that means we need more individual dwellings. Even if the population wasn’t growing as fast as it is, right? It’s like we’re trying to fit everyone into a phone box, but you know, instead of a phone box, it’s well, the entire country. And don’t even get me started on the rental market.
Oh, right. We Can’t ignore that, can we? That’s like a whole other layer of complexity in this housing puzzle.
So, we’re talking about vacancy rates at record lows, like nationally. A tiny 1.2% according to SuburbsFinder.
1.2%. You practically have to win the lottery to find somewhere these days. No wonder rents are going through the roof. Sydney averaged a painful $720 a week.
It’s brutal out there for renters. And honestly, it’s pushing a lot of people toward that buying decision, even in this crazy market. I mean, suddenly For some, those high purchase prices seem well, a little less scary than forking out those kinds of rents forever, right? Okay, so just to sum up, we’ve got high demand from buyers and renters, that fear of missing out, pushing prices higher, and a population that’s not just growing, but changing the way we live. But here’s the million-dollar question. If demand’s so high, why aren’t more homes being built? Wouldn’t that help even a little?
Yeah, you’d think so, wouldn’t you? I mean, usually high demand equals more supply, right? And then things level out. But the reality is a bit more complicated. Unfortunately, the supply side of all of this has its own hurdles we have to unpack.
So, we talked about this massive demand for housing, but what about the other side of that coin? Why aren’t we seeing more houses actually being built to, you know, meet this demand?
Well, that’s the million-dollar question, isn’t it? And literally in this market, you’d think homeowners would be rushing to cash in with these prices, right? I mean, it seems like a no-brainer. Sell high, make a profit, maybe retire to Bali.
Yeah. think, but if you look at the data from real estate.com.au, it’s a different story. Listings are actually down, which means fewer people are putting their homes on the market at all. Instead of this flood of properties, it’s more like a trickle.
So, what’s the holdup? Are people just waiting for even higher prices? Is that it?
It’s like that saying, you know, the grass is always greener. A lot of homeowners are holding on tight, basically betting those prices are going to keep going up, playing that waiting game, hoping to time the absolute peak.
It’s like they’re playing poker. but with houses. But that just makes the scarcity even worse, doesn’t it? Fewer houses, more competition.
Exactly. It’s a vicious cycle kind of. The scarcity makes that FOMO even stronger, you know, which pushes prices up even more and then even more homeowners are like, “Well, I’ll just hold on a little longer.”
Okay, so we’ve got homeowners basically sitting tight, waiting for that even bigger payday down the line. But what about new construction, though? Why aren’t we seeing a building boom to, I don’t know, help bridge the gap a little? Makes sense, right? That classic market response, high demand, boom, construction goes up to meet it. But then you look at something like the Australian construction insights report and it’s showing new builds are down 15% since that 2021 peak.
Whoa. Down 15%. That’s not exactly what this market needs right now. What’s causing the slowdown?
Okay, so imagine you’re a developer looking at this whole situation, right? You’ve got crazy high demand on one hand. Sounds great. But then there’s a whole other side. A bunch of challenges that are basically eating into your profit. s making things riskier than ever.
Okay. Like what kind of challenges are we talking about specifically?
Well, for starters, construction costs, they’ve exploded. Materials, labour, everything’s more expensive. That eats into profits. And suddenly those projects, they’re not as appealing to investors, are they?
Right. It’s like trying to bake a cake. But the price of flour, sugar, eggs, all tripled overnight, might rethink those cupcakes.
Exactly. And then you’ve got the labour shortage on top of that, which is hitting construction really hard. Big skills gap, simply not enough qualified tradespeople to meet the demand. So wages go up, which means what? Even higher construction costs.
It’s like this crazy cycle. High demand, but building is expensive. Finding workers is hard. So fewer homes get built.
And if that wasn’t enough, you’ve got those geographic limitations we talked about before, especially in places like Sydney, Melbourne. Can’t exactly magic up more land when you’re surrounded by ocean, parks, and you know, existing development, right? It’s like trying to build a house of cards on a rocking train. All of these things, homeowners holding back, construction challenges, geographic limits, they all add up to this, well, crazy complex and volatile market. Makes your head spin a little bit.
It’s complex. Absolutely. But you got to understand these things to make any sense of where the market might be headed, right?
No, absolutely. It’s not just about today’s prices, is it? It’s those long-term things that are shaping the future of housing. here in Australia. So, we’ve looked at the demand side, we’ve looked at supply, we’ve really gone through the ringer here, and the Australian housing market is like, well, stuck in this tug of war. Nobody is really winning right now.
Yeah, definitely a lot going on. That’s for sure. But remember, those longer term trends we touched on, they’re really key to understanding where we might be going, right? You’re talking about population growth and all that. Even household sizes are shrinking, those are going to stick around, aren’t they?
Exactly. This isn’t just a temporary blip, right? These are, well, fundamental shifts. that are going to keep putting the pressure on for years to come probably. Yeah. Even if things cool down a bit right now, those underlying factors aren’t going anywhere.
So, what does this all actually mean for the average person, the ones trying to wrap their heads around all of this and figure out their next move? Are we all doomed or is there some light at the end of this very, very expensive tunnel?
I wouldn’t say doomed exactly, but it’s definitely a time to, well, be smart about your decisions. You can’t let emotions get in the way too much. you know, that fear of missing out, it can really cloud your judgment.
Yeah, that’s easier said than done when you’re seeing those headlines every day. You know, record prices, bidding wars, it’s a lot.
Oh, absolutely. But that’s exactly why you’ve got to arm yourself with information, you know, understanding those forces we talked about, the short-term, the long term, that’s what helps you make better choices, whether you’re buying, selling, or just trying to survive renting.
So, no crystal ball predictions from us, but a healthy dose of realism and really digging into the data.
That’s it. Look, there’s no one right answer here. Everyone’s different. Their situation is different. What works for one person might be a disaster for another. You got to look at your own circumstances, what you’re comfortable with, your goals, right? It’s like finding a good tailor. Yeah. You need someone who can take all those measurements and create something that actually fits you.
Perfect analogy. And never underestimate good information. The more you understand the why behind what the market’s doing, the better. you’re going to navigate it no matter what happens.
Couldn’t agree more. So, there you have it. Deep divers. We’ve gone from those crazy prices all the way to those underlying forces shaping the Australian housing market, demand, supply, those long-term trends that’ll keep housing a hot topic for a long, long time.
Yeah. And hopefully, you’re walking away with a better grasp on this whole thing, feeling a bit more empowered. Right. Knowledge is that first step to making good decisions no matter what the market throws at you.
And on that note, we’ll leave you with this thought. We’ve seen how complex the housing market is, all these factors playing into each other, but knowing what we know now, is it just about building more houses, or are there bigger, more fundamental changes needed to really tackle these challenges? Something to think about as you continue your deep dive into Aussie real estate.
We hope you ENJOYED our first podcast episode!
Until next time, happy diving, everyone.
