Is there enough to go around?

The housing supply/demand equation has become so imbalanced over recent years that we have shifted into what is being called a housing crisis.

So, is there a solution?

Many recommendations to resolve this issue have been bandied about, with increasing supply being the main one. Others, such as decreasing migration, have been suggested and met with strong debate with most analysts agreeing that this will not be the answer. Proponents for decreasing migration point out that Sydney's population grew by 2.1% in the 12 months to 30 June 2023, according to ABS figures. Furthermore, the state is expected to gain a million new citizens over the next decade, principally from overseas, bringing the population to 9.1 million by 2033. With housing supplied squeezed already, they argue this will get worse.

Increasing supply is also faced with resistance from various sectors that a lot say will hamper it from achieving its goal.

Supply can be increased in a couple of ways – heighten density and/or release new land for development. Both propositions are being faced with resistance and cynicism. There is an element of NIMBYism when it comes to rezoning land in already built-up areas with opponents citing increased traffic, loss of space and views, and insufficient infrastructure to support the added population. Likewise for new construction in undeveloped areas; infrastructure needs cannot keep up with community demand and render the areas deficient in transport, schools, medical facilities etc. making them less attractive to live in.

Although buyer demand remains strong in our area, they are being more cautious than in the last few years. We have seen more property come to market this year but where there would have been 7-10 bidders at auction, now 2-3 is a good number. Interestingly, growth in property prices has continued, just at a more temperate rate, with some strong prices still being achieved.

Below are the latest housing stats from CoreLogic in a nutshell.

• CoreLogic estimates the combined value of residential real estate rose to $10.7 trillion at the end of May.

• The pace of quarterly growth continued to tick higher in May, with values up 1.9%, up from a recent low of 1.1% over the three months to January.

• Despite the uptick in quarterly growth, annual growth continued to ease from 9.4% over the year to February, to 8.3% over the 12 months to May.

• Over the three months to May, lower quartile dwelling values (3.0%) rose at more than twice the pace of upper quartile values (1.2%), with growth conditions continuing to be skewed toward the more affordable section of the market.

• New listings are trending higher than the historic five-year average and higher than this time last year, driven by above-average vendor activity in Sydney and Melbourne in particular.

• Despite new listings tracking above average, overall listings levels have remained fairly subdued, due to a strong rate of absorption from sales. Across the states and territories, Victoria stands out as having significantly higher total listings than this time last year.

• Compared to this time last year, annual national estimates are up 7.1%, but have eased slightly from an annual peak of 505,623 in the 12 months to April.

• The national median time on market was 31 days in the three months to May, which is steady on this time last year. Beneath the relatively stable national figures, days on market across Perth dropped to just 10 days (from 15 days this time last year), while homes are taking longer to sell in Sydney, Melbourne and Hobart.

• The combined capital cities clearance rate has gradually trended lower since early February, suggesting slightly weaker selling conditions amid high interest rates and a weakening economic environment.

While overall Sydney property values are likely to gain some more ground, there is not just one Sydney property market. A-grade homes and investment-grade properties remain in strong demand and are likely to outperform others, many holding their values well.