In this episode of Market Watch Deb and Scott delved into the August 2024 supply of new dwellings and the amount of listings (property available for purchase) across the Australian Property Market.
The chronic shortage of property is set to continue for quite a few years as the construction of houses and units continue to hover dramatically below the 20,000 dwellings we need if we’re to achieve the Federal Government’s 1,200,000 target for 2029.
The chart below shows the monthly supply of dwellings approved for construction starting to increase for houses, and a slow, small sideways change for construction of units. During the podcast, Deb and Scott also covered the differences in supply of new dwellings from a State by State perspective and discussed the impacts this was having on property values in each area.
Market trends > Are rooming houses really worth it?
Dwelling supply data is a leading indicator of where the market will head, and as we have seen in the chart above we’re going to be in chronic undersupply for at least the next three to five years.
Why do we say three to five years? When dwellings are approved (shown in the data above) it can take three to five years for the dwellings to actually be built and around 10 per cent or more won’t actually be completed. Add this to the point already made – we’re only approving around 50 percent of what the Government is targeting – and you have a chronic undersupply that we see continuing for three to five years . .or more.
If by some miracle we started to see 20,000 approvals hitting the stats, it would still take three to five years for these dwellings to be finalized.
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Rooming houses
So how can we deal with this issue? The drop off in construction of units has opened up a mini emerging market for rooming houses. A rooming house in it’s latest definition refers to a building that is divided into small single units, with some shared facilities like a large kitchen or lounge room.
The benefit of buying a rooming house is the high returns, however the purchase prices and ongoing costs are higher than typical investment properties.
Debra and Scott covered examples of good performing legal rooming houses, and an example of an illegal rooming house. They covered off the holding costs for these types of properties which include items most investors wouldn’t need to cover such as gardening, supply of furniture, suppling all utilities, internet costs and higher property management fees.
Tune in to hear Deb and Scott’s thoughts on whether the rooming house strategy is a good option.
About the author
Debra Beck-Mewing is the Editor of the Property Portfolio Magazine and CEO of The Property Frontline. She has more than 20 years’ experience in buying property Australia-wide and has extensive experience in helping buyers use a range of strategies including renovating, granny flats, sub-division and development. Debra is a skilled property strategist, and a master in identifying tailored opportunities, homes and sourcing properties that have multiple uses. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics. She is also an author, podcast host, and participates on numerous committees including the Property Owners’ Association.
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Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.
