The mortgage cliff has arrived as we enter the most restrictive interest rate settings households have ever experienced. Can the property market keep rising? ausbiz
, it’s economics 101: the supply is low and demand is ramping up due to a record pace of immigration and a post-pandemic desire for space.
Meanwhile, new builds are falling further behind. As Rob Mead of fixed income fund manager Pimco explained at a separate Morningstar conference, about 70,000 new households are formed every year. But the annual pace of construction is only about 40,000. In the short term, the acute supply shortage is manifesting in several ways. One is through an upward bump in house prices that arrested the interest rate induced decline.Rental vacancies in the capital cities are now at 1 per cent, well down on the 2.8 per cent average, which in turn has led to a 16.2 per cent jump in rents for units, and a 9.7 per cent increase for houses, according to Core Logic.
shares a similar view on rents. In commodities markets, he said earlier this month, the cure for high prices has always been high prices, and spiralling rents could lead to changes in behaviour and an increase in average household sizes.The tighter rental market does, however, appear to be forcing buyers into the property market, adding to the excess demand to own a home in a market with historically low turnover.
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