Why are housing prices rising?

Monday, 5th May 2014

Why are property prices rising is a question we are often asked. The easiest way to explain this is that property prices reflect the interaction between the supply of property, meaning the number of properties available for sale at that point in time and the demand for property, which is the number of people wanting to buy a property at that point in time.

At this point in time the supply of property is quite low, remember only about 5% of total properties within Australia are turned over each year and new construction adds about 2% to the total available housing for sale. The supply of property is also quite stagnant and takes a long time to actually change. 

The demand for housing can move a lot quicker than the supply and right now sustained low mortgage rates means that housing is very affordable and is driving up demand.

Remember that this is a point in time analysis as supply and or demand change so will the price of housing.

If you have a question or would like to know more about housing prices please contact peter@investoproperty.com.au