Who has to be blamed if we don’t invest?

This was news on nine MSN on 5th August, 2010 that the extraordinary growth in house price in Australia’s capital cities over the past year has resulted in the value of an average home in Melbourne rising by nearly $98,000.

A 24.3 percent rise above the median Melbourne house price of $403,000 for June, 2009 equates to an annual increase of $97,929. This figure provides welcome news for first home buyers, indicating the growth in property prices has peaked and is now declining. Again, Economists suggest demand may continue to keep prices stable, with 200,000 new homes needed to house Australia’s growing population.

Many different views are emerging from Economist as to this demand depends on the new Government policies on immigration. The current migration is around now 300,000 arriving Australia every year and this may or may not be reduced to half of its current intake.

The current shortage of dwelling is around 300,000 and to fill this gap even if we assume for one second if total migration is stopped will take another eight to ten years to stabilized the existing shortage. Migration is not the only criteria but Australia is also growing with families having babies, people living longer due to advance in Medical Science. Australia requires around 200,000 new homes where as we are only building around 165,000 new dwellings each year.

From a supply and demand perspective, America is over built too many houses. In Australia it is exactly opposite. We are not building enough houses…..More