Housing Supply Not Key Price Driver

Increasing housing supply will not necessarily push down home prices, a study has found.

The AEC Group research, commissioned by the Local Government Association of Queensland, found movements in the share market, disposable family income and jobless rates were stronger influences on housing prices.

LGAQ chief executive Greg Hallam said the report showed the South-east Queensland property market was unique. “You cannot assume that the factors driving prices elsewhere in Australia will apply to this region,” he said. “The report also underlines the spuriousness of claims that there is an undersupply of housing. In fact, the report states that stocks may be in oversupply.”

Hallam said factors affecting housing demand varied from one council area to another. “For example, increases in disposable income had a strong influence on house prices in Logan and Ipswich but in Brisbane the big factor affecting house prices is the home loan rate,” he said.

AEC said its 2015 results were consistent with its previous study, undertaken in 2010. “The findings of AEC (2010) was that the SEQ housing market does not behave similarly to the national market, demonstrated by the evidence over 20 years in SEQ that downward pressure on prices was not as responsive to positive increases in supply,” it said.

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