Recently released Australian Bureau of Statistics (ABS) December quarter dwelling commencement figures, confirm that the prime factor driving price growth is the supply shortage. This represents the biggest threat to affordability over the next five years.
According to ABS and REIV statistics over the past five years, Melbourne’s rate of population growth has increased by 84 per cent, while the number of dwelling commencements in Victoria has increased by only 22.4 per cent (seasonally adjusted).
“There is no doubt that the mismatch between supply and demand, underpinned by increasing population, is driving house prices in Melbourne” says REIV CEO Enzo Raimondo.
The REIV Annual Property Update for the 2009 calendar year released in March, shows that as the population has increased, so have house prices.
The report further revealing that since 2006, the Melbourne median house price has grown by 23 per cent compared to only four per cent for the period between 2003 and 2006.
“The dwelling supply shortage is also evident in the rental market, which has now seen rising rents and a vacancy rate below three per cent for five years.
“Unless we continue to see increases in the number of homes that are being constructed, home prices will continue to grow, making it significantly harder for home buyers and particular first home buyers,” Mr. Raimondo concluded.