I’m amazed by the amount people are paying for houses at the current moment.
It’s a supply and demand situation, as revealed by a report a while ago, that I was reading.
Essentially, the First Home Buyers Grant, and other related items forced prices to become inflated by the amount of the grant, and to top it off, demand increased whilst supply hasn’t actually moved much at all.
What can be done to sort out the supply issue though?
Houses cost money to build, and they require land, something that requires closer monitoring on use, as it is indeed a finite resource, and every man and his dog will inevitably have to accept they can’t all own houses close to work in a city area, there’s simply not enough land.
The only way for increasing supply in those areas, is by reducing demand, ie, encouraging business to move out further regional, so demand shifts to regional, or, build up, into the air space (live on top of your neighbour).
The traditional home and backyard, whilst living close to work, with increasing population, is just not going to work. There’s no physical way to fit houses beside houses in built up areas, and construction is a long process.
So, the time will come for business to move out regionally, or, for all those houses dotted around city centers to become apartment complexes.
I’m beyond belief as to how around $300,000 worth of materials and labour sells for near $1 million in some areas, in others the high $500 – $600 thousand dollar mark.
The upward trend will need to find a dip soon, the price goes up, but there will be a point where the market will start driving them prices down. What will it be? That’s not certain yet, something will put downward pressure in place.
Actually, it was one of Kevin’s election promises from memory to do something about the ‘Housing Affordibility Crisis’. What can be done? Incentives for business to move out regional and use some of the vacant land there for more residential? Not all business is able to be located far from a city centre, but with increasing capabilities in online communications, that’s not too much far away.
And certainly, I doubt many of the traditional australians are in favour of dumping the house and large backyard for a Japanese lifestyle of a single apartment, and your dining room is your lounge room, which is also your bedroom, as I seem to recall being the norm in Japan (they manage to pack things in tight places, and require little room to live).
Australia has lots of land, but we can’t have homes in the desert unless there is matching business in the desert too. I don’t think there is much attraction to starting a business in the desert with exception to perhaps solar and geothermal power, or if there was ever oil found or something of the like.
So, we don’t have an infinite supply of land, and we still have to try and preserve a lot of the natural surroundings to prevent nature destruction, I’m of the conclusion man has done more than enough damage to the planet as a whole.
I’m curious to find out what Rudd has planned to solve the Housing Affordability Crisis. I would love to own a home one day, but that said, I’m not going to pay excessively inflated prices for it. The peak will find a trough to dive into soon enough.