Why prices are growing rapidly across comparable estates in a supply-constricted market
The rapid growth of home prices in constrained markets is driven by excess demand from buyers who missed out on previous estates, leading to excessive price increases.
Full transcript
We're out at Covella in Greenbank. This estate had its final release in December of last year.
What basically happens when an estate comes to its end is that you have this huge buying pool of people who missed out on this particular estate then spreading out across the other estates. When we're already in a supply-constricted market, you've got excess demand that's still there and that's now being dispersed in other areas that are also supply constrained.
It means that prices grow in these other areas at a really excessive rate, and that's what we're seeing across the board. When we're looking at comparable estates last year, a 350 square metre lot was selling for about $1,000 per square metre, so that was $350,000. We are now seeing those exact same lots in the current market being sold for over $500,000.
So those buyers last year took the opportunity when they had it and bought it when the market was cheap. Now, the crazy thing is that even in a market where it's grown so much, I guarantee you in a year or a year and a half's time looking at $500,000 for a comparable lot is going to seem cheap, and that's just the reality of the situation we're in.