The group’s latest Economic Insight report revealed that the national shortage of housing “remains significant at approximately 250,000 dwellings, albeit lower than previously estimated”.
“Our estimates indicate the Australian housing market is a long way from being in structural surplus,” ANZ Research said.
“Our forecasts for housing construction and underlying housing demand point to a modest unwinding of the current housing shortage in coming years.
“This easing will, however, challenge the short-term support to dwelling sales and price growth from the underlying supply-demand imbalance in some markets.”
ANZ Research said that while an underlying shortage of housing has little effect on short-term price growth, it does provide significant support to the long-term level of house prices, offsetting the downside risk to prices from short-term factors.
“Looking ahead, markets with significant unsatisfied housing demand, particularly Sydney, have limited downside risks to prices absent unexpected shocks to household incomes,” the group said.
“That said, short-term/cyclical factors that drive house prices lower are likely to have more amplified and longer term impacts in housing markets with weaker supply-demand balance fundamentals. That is, housing markets currently experiencing strong growth in new housing completions (i.e. inner CBD Melbourne apartments, Western Sydney housing) and/or sharply weaker population growth (i.e. WA and Queensland mining regions) are likely to be more exposed to cyclical price falls than other markets.
ANZ noted that house prices in markets that are considered more or less ‘in balance’, such as Adelaide, Hobart and Canberra, have much softer fundamental support and are more exposed to regional economic conditions.
[Related: Sydney's property prices buck trend]