Have you thought about building your next investment property?

You may never have built before and may never have even thought about it but could now be the time to start? Australia is more than 180,000 homes in undersupply. We could keep building for 18 months and only catch up on demand. In his June quarter report Matusik provides some very interesting statistics to suggest why now could be the time to consider just this.

Australia’s population rose by 390,000, the equivalent of a city the size of Canberra, to reach 21.5 million people last year. Until two years ago, the annual population growth had never exceeded 300,000.

• Queensland remains the fastest growing state, followed closely by Victoria and New South Wales. Over 85% of our growth takes place in our capital cities and immediate surrounds with Melbourne showing the largest increase in population in recent years.

• First home buyers hold a 20% market share of total new Australian housing loans, close to 30% when looking at loans to owner occupiers in isolation. They mostly buy established homes and contrary to popular belief first home buyers do little to stimulate new housing starts.

• Housing finance for new dwellings has been on the slide since the mid 1990’s and the real death knock was the introduction of the GST. One in three housing loans were to new property twenty years ago. Today it is less than half of that. It is little wonder that the new housing market is undersupplied.

Queensland faces the worst undersupply of new housing with new starts down 50% of last year’s supply. Misdirected government policy and planning doctrine has artificially restricted new dwelling supply across much of the Sunshine state and in particular across the south east corner of the state.

New supply is likely to remain too tight, leading to a rapid increase in the price of housing, which when interest rates return to more normal levels could create an affordability crisis. In due course and unless new supply is forthcoming Queensland is likely to see a slowing in population growth and real falls in housing prices.

Investors whilst growing in confidence have yet to enter the market. When they do and given the tightness of new and existing supply, end prices are likely to leap. This is particularly the case in the sub $500,000 established market and for new properties priced under $750,000.

Statistics taken from the RBA, ABS, HIA and RP Data.