More to housing market than Sydney and Melbourne

Commentators and policymakers have been reminded that a majority of Australia’s population live outside the big two capital cities.

The Housing Industry Association (HIA) has used a new report to claim that the state of Australian property prices is not always reflected in commentary and debate.

The report said that transactions are at “historically high” levels in Sydney and Melbourne – but that those markets represent only 40 per cent of the population.

However, price growth is “relatively modest” for the remaining 60 per cent, according to the HIA.

“This generalisation seems to be reflected in some commentary around macroprudential tools also, implying that should such a measure be implemented it would apply in a broad, rather than targeted manner,” it said.

The HIA also said the recent speculation about macroprudential tools, or new lending rules, could be having the unwelcome effect of reducing confidence in weaker markets.

It could also run the risk of bringing the current “elevated levels of new housing supply” to a premature end, thereby putting upward pressure on prices.

“Over the past year, the output of Australia’s residential construction industry has exceeded 180,000 new homes for the first time in two decades,” the HIA said.

“HIA Economics estimates the demographic structure of Australia requires an ongoing output of new dwellings to average, at a minimum, approximately 180,000 each year over the long term in order to ensure adequate provision of housing stock to accommodate Australia’s growing and ageing population.”

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