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Thursday, June 21, 2012

Census and Australian housing shortage/oversupply

Preliminary Census data is published a few days ago - census link, and as I expected it just confirmed some of my projections.

 First, couple of general (non housing) findings:

  • Total population increased to 21.5m, while total number of dwelling increased to 9.1m.
  • Population growth over the last 5 years was lower than projected (around 300k less – 60k less per year)
  • Household size remained stable at 2.6
  • 65+ is the fastest growing population group
  • Median household income was $64k

Housing data is also interesting.

Ownership rate decreased from 68.1% to 67%. Outright ownership decreased from 34% to 32.1%. Percentage of mortgage owners and renters who spend more than 30% of income on housing increased as well. Income increased only 20% while house prices increased 33.3%, and median mortgage repayment 38% over the previous 5 years. Although income and repayment census data is not very reliable, this suggests that housing became less affordable.

Percentage of unoccupied dwellings increased from 10.4% to 10.7%. Total number of households increased by 616k; number of private dwellings increased by 720k. More than 100k dwellings that were built since 2006 are not occupied. One new dwelling was built for every 2.3 new residents while average household size stayed 2.6.

All this suggests that there is no housing shortage in Australia. In fact, it suggests that oversupply of homes increased in 5 years. The oversupply increase since 2006 seems to be higher than what I predicted here. The likely reasons for this are wrong population growth estimates and my methodology that tends to underestimate oversupply. This means that current oversupply most likely exceeded one million homes.

Oversupply of homes is significantly up, price to income ratio is up, demography is getting worse, …  It seems that there is nothing about real demand and supply that can drive house prices up (or support current prices). It is all down to speculative demand and credit availability. 


  1. Good article that reinforces what anyone with an ounce of common sense will already know; house prices in Australia are a house of cards underpinned by lax lending standards, dodgy valuations and a long queue of greater fools afraid they'll 'miss the boat', a sentiment peddled by the spruikers who stand to go broke when the whole ponzi scheme collapses. It is most definitely a case of if, but when.