Chapter 1: What predictions does Simon Kuestenmacher have for the housing market in 2022?
It's the Real Estate Podcast brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of the Real Estate Podcast. We're talking to Simon Kustenmaha from the Demographics Group. And we've already spoken to Simon once before. He gave us some predictions for 2022. Simon, welcome back to the Real Estate Podcast. It's awesome to be back.
Now, first question I've got to ask you is, has there ever been a time in history when such an emphasis has been put on the housing sector, especially with the phrase like the market is hot or demand has outstripped supply or the market continues to break records? This is probably easy to read, but the government... has no appetite, right, for house prices to drop.
So this is likely to continue pretty strong into 2022. Yes, I would predict house prices to continue to go up simply because there is no appetite, as you mentioned, from politics to actually drive down house prices. There are levers. We know politicians could pull in order to drive house prices down.
But we saw this at the last federal election, the unlosable election that Bill Shorten lost, that this is not popular. We have a very high share of the population owning their homes in Australia. We have the vast majority of them, their family home is their largest asset. It makes up the biggest share of their wealth. So
So any policy that drives down house prices will be very unpopular with about 70% of the population. So therefore, politicians, in order to pretend to do something useful, they can only introduce tiny little policies That at least on the face of it look like they might solve the house price crisis, if you will. And, you know, then you introduce a first homebuyers grant. That's nonsense.
It just makes sure that everybody has more money. It doesn't increase the number of houses on the market. It doesn't change the supply side.
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Chapter 2: How does government policy influence house prices in Australia?
And so it's a policy that kind of like sounds good at first glance. You know, sounds good on a soundbite, but it doesn't really touch house prices down. There's no appetite whatsoever to drive house prices down.
So I would predict based on this alone and based on the fact that we will continue to see the big millennial generation leaving their inner city apartments in order to buy big family sized homes and the return of migrants to Australia. That means there's enough activity in the housing market and the prices will stay up in 2022 as well.
And with the pandemic comes a lot more time for people entertaining at home. And of course, what comes from that is the question of whether in 2022, the average house in Australia will in fact become bigger in 2022. Have you got any sort of thoughts, predictions on that? Absolutely. So the average house size in Australia is only going to go up The first element there is very easy.
It's because the big generation of the millennials is leaving relatively small apartments behind and they're buying, they're building relatively large houses. That drives the average house size up as is. But there is, of course, another trend that was pandemic-induced, which just means that we take functions that were used to be done outside of the home, entertaining, eating, exercising, working.
You took those back into the home. All of these activities actually need space more than anything. So all of a sudden, you know, you might as well plan in another room in most houses for a study. Then you want to make room for a bit more exercise equipment. All of this really results in larger homes.
Yeah, it's interesting because when you think of like a Zoom room, an office as you're talking about, it wasn't that long ago that a home cinema room was kind of put onto the plans. But I think office now is just way ahead of a cinema room. Absolutely. And offices don't need to be terribly big.
They need to fit a large desk and they need to have a door to keep the kids and the cats out of the business calls. And that's about it. So it's a relatively easy room to add to a house. You know, not all home offices need to be terribly fancy and big. For most people, that will be sufficient to have a reasonably small room set aside for that.
And so as we spend more time, particularly in the home, we're spending more than ever in places like Bunnings, barbecues galore, Harvey Norman. I mean, it's a big spend going on as well. So we are cocooning. We're spending more time at home. That means we're spending less time abroad, which is a big expense for many households.
that means we have more money that is just you know just available to us to be spending on making our house prettier better and bunnings is an obvious winner winner or you know bedding furniture white goods all of those things are big big winners in the pandemic
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