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We do not have a 'housing bubble' and there is a simple explanation why

Dean Honan

Morgans

We do not have a 'housing bubble' and there is a simple explanation why. The media are pushing the notion that we are in the midst of a 'housing bubble' without taking into account the fundamental principals of supply and demand. What drives housing demand is population growth. Where this 'demand' occurs comes down to where the jobs are located, hence the surge in Perth property values during the mining boom. The Bureau of Statistics reported that 105,000 houses were completed last year when demand indicated we required 180,000. According to recent figures we are 306,000 houses short with the figure to rise to 500,000 by 2020. Refer to chart below, whilst population growth has intensified over the past decade, building approvals have declined. Once again there is evidence to suggest that population growth is underpinning the supply shortage. Until this is rectified property values will continue to rise.


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Dean Honan
Dean Honan
Senior Stockbroker
Morgans

I am a senior stockbroker with close to a decade of experience in financial markets. Prior to joining Morgans I held senior advisory roles with Morgan Stanley and UBS AG

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