Supply and Demand

Supply vs. Demand is something that I like to follow very closely.  It is an important indicator because like with any product, an increase in the demand of that product coupled with a decrease in supply of that product is inevitably going to lead to an increase in price of that product. It is a simple economic equation and one that anyone wondering how to get started in property investment should be keeping their eye on.

The problem is though; the figures can change depending on who you are talking to at any one time because the numbers for supply and the numbers for demand are not an exact science.

I did read an interesting report from a well know investment property advisor this morning who is fairly conservative with his views on this subject. By this I mean that his argument was (contrary to most commentators) that there has never been a supply and demand issue in Australia. He has now changed his view in light of recent up to date figures and now believes there is a supply and demand shortage is some places and that on an overall national level we are building 32 000 too few dwellings then we need. Also commenting on demand he said that Australia’s rate of population growth rose from 259,000 during 2010/11 to 360,000 during financial 2012 – a 40% increase. This should put upward pressure on prices which is music to the ears of any property investment advisor.

Locations he mentioned that are undersupplied include:

• Brisbane
• Sydney
• Perth
• Gold Coast (detached Housing)

Oversupplied locations included:

• Melbourne
• Adelaide
• Canberra
• Geelong
• Bendigo
• Ballarat