Housing prices in Australia are heading even higher, unless new supply can satisfy demand. Despite the global slump, 2009 saw double-digit price growth for Australian real estate — which led to multiple lending rate hikes, while property starts sagged. See the following article from Property Wire for more on this.
Residential property in Australian will keep rising due to a shortage of new builds and land with 200,000 homes needed to make up for shortfalls in past years, it is claimed.
In addition 150,000 new properties need to be built every year to keep up with demand, including a rising population, according to Caryn Kakas, executive director of the Residential Development Council.
‘The only way to stem the increase in home prices is to meet the backlog. That’s going to take at least five to 10 years. We’re going to continue to see price growth in the market,’ she said.
Property prices rose 13.6% last year as Australia failed to suffer as much as other countries in the global economic downturn and the country’s economy recovered faster. Indeed, it has prompted Reserve Bank Governor Glenn Stevens to raise the benchmark lending rate four times in the past five months.
New property starts totaled 97,002 in the first three quarters of 2009, statistics bureau data shows, down from 114,644 in the same period a year earlier.
But as well as building new homes, developers also need to look at what is needed, added Kakas. As many as 60% of new homes need to be apartments or townhouses to cater to the growing numbers of smaller and single person households, Kakas explained.
But lending to developers has tightened, particularly for apartment projects which are deemed to have higher risk than house and land developments.
Developers are now required to have pre-commitments for as many as 80% of units in a project to get funding, compared with 50% 18 months ago, Kakas added.
But she also warned that planning authorities and developers need to works together.
When developers approach local councils with plans for higher density projects, for example, they often face opposition and higher costs.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.