All I want for Christmas... is some more houses

Just in time for Christmas we’ve received the results of the National Housing Supply Council’s State of Supply Report 2011.

The Council’s report provides independent and consistent data on housing supply, underlying demand and the supply-demand gap, as well as affordability. The report has become a trusted resource for both government and industry. Reference:  http://www.nhsc.org.au/supply.html

With so much debate going on with whether there actually is an under supply of housing or not, this report gives some real weight to the argument. In fact, it’s pretty clear.

The Council projects that underlying demand and supply over the next 20 years will see a shortfall of over 600,000 dwellings nationally.

Wow...that’s a lot of housing that will be required despite ‘weaker market conditions’ that are being touted right now.  But I’m not really seeing ‘weaker’ conditions. In the areas Property Bloom develops things have started to move. Just this week we found a fabulous development site.  It is a solid three bedroom house on 1012sqm with two street frontages (there’s the twist).  This potential development site had plenty of interest, so much so that we had to race to exchange in order to secure it and take it off the market before Christmas.  The agent received over 30 enquiries in under a week.  On this site we’ll build a three bedroom duplex – two attached 3 bed villas – for our clients.  So we’ll create three properties from one. 

This is where I make the familiar reference to the two speed economy.  You will find that in any large region where there is lots of employment opportunities – as we see in the Hunter Region of NSW – there will be strong demand for housing.

But it’s not just any housing that’s required. We need to tailor to the needs of the community.  The State of Supply Report uncovers that the numbers of households comprising couples without children and lone-person households are projected to grow much more rapidly in all regions than are the number of households that are families with children.  With an aging population this all points to a need for smaller dwellings. The projections suggest that most regions can expect a greater relative increase in demand for flats than for separate houses.

Here’s an important point:  “...demand for private rental dwellings may well increase more sharply than is projected, due to social housing stock not increasing in proportion to increased underlying demand...”  What is that telling you investors?  Rents will continue to increase, combine this with interest rates dropping, buy in the right area and you should end up with a very strong yield.

With affordable housing in great demand, Property Bloom addresses this by developing properties; renovating houses and then building a granny flat. This strategy can be turned over very quickly and we basically double the housing capacity for that property and create a 9% gross yield for our clients.

By building villa developments in large regional towns like Muswellbrook, Cessnock and Maitland we are also providing good quality, affordable dwellings. These are quickly snapped up in the rental market.

So if you are looking for to give yourself a Christmas present, consider developing property, or at least purchasing one, in areas where there is an under supply and strong demand. You’ll not only be doing yourself a favour, but also the communities you are investing in and assisting with the shortfall of housing.  Merry Christmas!