CHARTS OF THE DAY: Housing Shortage Could Bump Prices By Up To 20%

Picture: Getty Images

The ANZ has been taking the ball up on housing over the past week with some solid research from its Property Team and recent public discourse from the Head of Australian Business Phil Chronican, ANZ Chairman John Morschel and ANZ Chief Economist Warren Hogan.

Two themes are evident in the ANZ’s public utterances:

  • They reckon house prices are going substantially higher, 15-20% in the next couple of years but as yet there is no bubble;and
  • There is a massive gap in the demand and supply for dwellings

It’s a theme Hogan picked on in a briefing yesterday, noting that by his estimates, there would be two years of supply shortage by the end of next year.

He further noted that a necessary part of the Australian economy’s transition away from the mining boom to more domestic lead growth had to be investment in dwellings, which has been in “retrenchment” for the best part of decade.

At present it seems the ANZ is the only major bank publicly discussing the problems that this lack of dwelling investment is posing for Australia and Australians. In particular, it’s concerned for the potential for a redirection of investment toward construction as a way to help the economy transition to more balanced growth, now the mining boom investment cycle has peaked.

While Hogan noted the NSW Government is working hard to increase investment in the housing stock, it’s something that Australia as a whole appears to need – and badly.

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