Thursday, August 24, 2023

Issue:

Mackay and Whitsunday Life

Property Point

What I like about economics is that it can be as complicated or as simple as you want to make it. There’s Paul Keating’s j-curve, monetarism, Keynesian theories, macro and micro economics … a complex array of theories and perspectives.

But there is also the theory of demand and supply, which is quite simple and explains a lot. I’m no economist but the basis of the theory is that the price of something will vary until it reaches a point where the quantity demanded equals the quantity supplied.

So, basically, if there is a glut of something on the market and the demand does not meet the supply, the price drops until the market decides to start buying.

If there is a lack of supply and strong demand, prices go up until demand and supply reach an equilibrium.

I mention this because of some recent figures that came out about population ups and downs in Australian regions and what it said about Mackay.

Michael Matusik is a property analyst and adviser who puts out a very interesting blog called the Matusik Missive and his most-recent blog featured an Australian Bureau of Statistics re-assessment of population growth and falls in Australian cities.

The ABS recently released their reassessment of population growth (and falls) from what they predicted in 2021 and found various places, such as Sydney and Melbourne, were predicted to be down 2 or 3 per cent from the earlier prediction.

Gold Coast was down 2 per cent, Brisbane was zero change.

Mackay was among the regional areas that bucked the trend with a prediction that it would be up by 5 per cent. There were only two other places in the country that had a higher prediction than Mackay; Kalgoorlie at 7 per cent and Geraldton at 8 per cent.

Even Rockhampton and Cairns were at zero per cent.

My primitive understanding of economics tells me that population growth will create a demand for housing. We know that there was not an increased supply from 2012 till 2018 because nothing was built and it is very difficult to get homes built now because of staff shortages and supply issues.

So, if we have a growing population (more than expected) and a limited supply of housing, one would expect a strong outlook for the housing market in this town.

There is a lot of national media talk about housing downturns as a result of high inflation and high interest rates. But there could well be a different experience in a city like Sydney with million-dollar mortgages and lower population growth compared to somewhere like Mackay with much lower mortgages, a growing population and a lack of supply of properties.

Meanwhile, open homes are getting good numbers and properties are definitely selling in this town. Our Mackay economy, rather than the national economy, is the key and I look forward to writing about that in the coming weeks.

In other news