RCR Finance Bulletin # 4 - Tuesday 30th October 2007

 Chronic Housing Shortage Looming

The lack of new housing in Australia coupled with an influx in migration is piling pressure on the nation’s economy.

HIA figures released this month show the downturn in building approvals to be the longest seen in 24 years. Moreover, with reporting house BIS Shrapnel forecasting the arrival of over 185,000 permanent overseas migrants between 2007/08 – the highest annual inflow on record – the pressure for an increase in building activity is growing.

“The provision of an adequate supply of housing is a key contributing factor to Australia’s long-term economic growth,” said Jason Anderson, a senior manager with BIS Shrapnel.

Anderson warned that the current rate of residential construction is substantially below the required demand – prompting the urgent need for a construction phase to safeguard the economy. Anderson also indicated that the undersupply of housing is leading to acceleration in rents.

The current undersupply state of the market may present some sound opportunities for new investors looking to get into the market, or experienced investors looking to further their portfolios on the back of improved rent returns.

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