Large Housing Deficit and Reduced Construction Lead to Higher Home Prices

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According to the Bureau of Statistics the construction of new homes fell four times more than economists expected in the final quarter of 2010, by 5.3 percent. Combined with a large housing deficit, this has led to an increased demand for the existing properties, which will eventually cause prices to rise significantly. If this situation continues, many Australians will find themselves unable to afford a home.

The recent release of the figures regarding home construction in the final quarter of 2010 has been less than encouraging, with construction slumping by 5.3 per cent, much more than anticipated. While some economists believe the situation will soon improve, the housing industry warns that more action should be taken by the government to encourage home building.

The main fear of the housing industry is that builders will soon be undercutting each other to the point where contracts will no longer be lucrative while potential home buyers fight for the existing housing stock. The increase in demand can only have one outcome and that is a substantial increase in prices.

"Whether or not we are meeting 5 year or 10 year averages, the simple fact is, we have a huge dwelling deficit. This impacts on the entire housing industry’s ability to remain afloat as builders cut each other’s throats to ensure they win the few jobs are around. It also forces up demand on the current housing stock, and thus prices – its very basic economics," warns John Condon, the Company Director and founder of Harbour City Homes.

Many site problems such as high taxes, infrastructure issues and excessive red tape lead to higher costs and building prices that either aren’t affordable to the end-user or aren’t feasible to the builder. Either way, the result is the same. An overall increase in property prices, on the tail-end of an increase in rates, which will likely end with the housing industry grinding to a halt if nothing is done about it.

"Policies should be introduced to see a reduction in the amount of Red Tape that each level of government has in place, and also taxes. If they didn't make it so hard for people to build, people would build," explains Mr. Condon.

Some experts believe that property prices will not rise more than 5 per cent in 2011, but this is based on the assessment that the demand and housing availability will balance out and doesn’t take into account the already large housing deficit.

Harbour City Homes is a residential and commercial building company that has been in business for more than a decade. Mr. Condon has been in the building industry from more than 35 years, giving him a unique understanding of the market. As a result of his experience and high standards, Harbour City Homes has become known as one of the best builders on the market that delivers top notch quality homes, on time and on budget.

To learn more about Harbour City Homes and what Mr. Condon sees as the future of the housing industry, please visit http://www.HarbourCityHomes.com.au

Media Contact:
John Condon
198 Pittwater Rd.
Gladesville 2111
Australia
(21) 9817 2226
http://www.HarbourCityHomes.com.au

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