adelaide property podcast

Australian housing shortage makes a case for increased property investment

Adelaide real estate agent Scott McPharlin believes the Australian property market is facing a significant housing shortage in 2019.

This is despite the banks making it increasingly harder to borrow funds for property and the federal Labor government threatening property investors at the next election.

McPharlin told Bushy Martin on the Get Invested podcast that he isn’t buying into the ‘doom and gloom’ headlines and perceived pressure on Australia’s property market.

“With the immigration and that sort of thing that’s happening, I believe that we still haven’t got enough housing in Australia,” McPharlin said. “Despite the baby boomers getting to that point … there’s still not enough (housing).

“Not only that, I think a lot of the housing stock in Australia is standing at 110, 120, 130 square metres, 1970s built. That probably isn’t that perfect style of housing that everyone actually wants these days. So I think there is a transition in the type of housing and so the new modern stuff that everyone actually wants, there’s not enough of that stock.”

Bushy Martin agreed that the housing shortage and increased demand should strengthen the case for more property investment in Australia.

“Not only do we have an existing substantial housing shortage across the country, we’re talking, I think it’s about 500,000 houses short at the last count, that this is nationally, we’ve still got ongoing immigration pressure, but the things that aren’t factored into people’s thinking is the average household size, so we’ve gone from an average household of four down to about two and a half,” he said.

“Just by doing that, you’ve effectively put a 40% pressure on housing stock numbers. Regardless of what happens to population, we’ve still got some considerable demand pressure just by the fact that, unfortunately due to divorce and other things, it’s putting pressure on.

“And then if you add the fact that people are living 10 to 15 years longer than what they were, then those three combined, they can continue to put very significant pressure on supply.”

Despite this, getting finance for property is harder than ever before.

“There’s going to be some challenges coming in 2019 for sure, that is mainly around getting money,” McPharlin said. “I think most people are going to struggle, if they’re thinking it was as easy as it was 12 months ago to get a loan to buy a property, then they’re going to be really surprised.

“The banks traditionally just used an average guess on what your expenses are as of the last few weeks. Then (now) they’re asking to look at your last six months of actual transactions on what you’ve been spending. So what it means is, if you’re about to buy a property, then make sure that you are very conservative in your spend in the six months leading up to it.”

McPharlin believes that pressure on the Australian property market will create opportunities for those who play smart.

“It’s about making sure that people get themselves in a position to be able to take advantage of the best things about this market,” he said.

“And the best things about this market is there’s going to be more stock available. There’s going to be less competition, which means that there’s going to be the ability for people to be able to buy better properties at a better price and have more choice.

Yeah, absolutely. I still believe that this market is a great time for anyone looking to transact. You’ve got to have some really skilled players on your team, that KnowHow to navigate the circumstances and, obviously, that’s the sort of business we’re in. But if they have taken care of that side, then this will be a really rewarding time.”

Listen to the full interviews here.

Want to Know How you can build wealth with property with the help of leading, qualified experts? Talk to the team at KnowHow, now.

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