Real Estate Symposium looks at the future of Australian house prices

Thursday, 15 September 2016  Features

The UNSW 2nd annual Real Estate Symposium has highlighted some of the latest academic research into Australian real-estate.

The event was hosted by Professor Kevin Fox - Director of the Centre for Applied Economic Research. He said “the real estate sector represents a substantial share of the assets of both businesses and households and it is a major influence on the performance of the economy. So the question of whether house prices and land are overvalued is an important one of great policy relevance, as are issues about how to tax land to fund infrastructure investment.”

Professor Fred Hilmer, former Vice Chancellor of UNSW Australia, revealed how the combination of a lack of competition in the labour market, over regulation and little improvement in productivity have all served to increase the cost of housing construction in Australia. He noted that the lack of productivity is a global issue and the industry remains barren of efficiency gains especially when compared to global manufacturing.

Associate Professor Glenn Otto presented his research from his paper “How Connected are Australia’s Major Housing Markets?”, which found that Australia’s housing markets appear to be connected by spill-over effects from city specific shocks. “The power of these spill-over effects has been rising through time,” he said. “Spill-overs seem to be stronger in units rather than houses and Sydney appears to have been the most important generator of shocks that are transmitted to other cities. There is little evidence that shocks from say Melbourne have had a significant effect Sydney prices.”

Tim Lawless from CoreLogic revealed some of his firm’s extensive database on Aussie real estate. He observed that Australia has had two real-estate markets since the global financial crisis, which has Sydney & Melbourne in one basket, and the rest of Australia in another. “There is likely to be an extensive increase in unit supply over the next two years in certain areas,” he said. “It seems that that the back half of 2017 and early 2018 will be the period when most of this new supply hits the market. The areas most at risk are in Inner City Melbourne and Inner Brisbane.

He presented figures showing that in Melbourne seventeen thousand new units are expected to come on-line in 24 months which will be a 22 per cent increase in supply. “Meanwhile inner Brisbane will see ten thousand new apartments set to be completed which will be a 30 percent uplift on the stock of supply. That is bound to have a significant impact on the market,” he said.

Nigel Stapledon, the Andrew Roberts Fellow and Director Real Estate Research and Teaching at the UNSW Business School discussed in his paper “Options for Value Capture” how new infrastructure shifts value around a city’s property market and how governments can tax the beneficiaries to potentially pay for the project.

The Real Estate Symposium at the UNSW Campus on 6th September 2016 is hosted by the Real Estate Initiative of the Centre for Applied Economic Research and supported by the UNSW Business School, RF Capital and the Australian Research Council.

Media contact: Julian Lorkin: 02 9385 9887

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