In part 1 https://www.urbanstatistic.com.au/project/property-scarcity-and-price-part-1/ we learnt what scarcity is and its relationship with utility. We also learnt why scarcity has an influence on both land and the improvements e.g. a house. In this article we consider the improvements on top of the land in the residential space e.g. houses.
Generally, a property that has a lot of desire, utility, and scarcity, is a very good asset. Character houses (pre-World War 2) fit this test for both the short and long term future. The only real enemy to character homes would be if people changed their preference for a substitute in the same location. Ultimately, if developers were to build dwellings that provided for families, and consumers deemed these as lifestyle substitutes, the value of character homes could relax. It might be laughable to consider, but if a couple of sky scrapers in the one location full of 3 and 4 bedroom units were to unfold, it would be interesting to see the result on house prices.
Architecturally designed houses are common, however each one is unique in character, design, layout, shape, materials, etc. Because of this difference these homes have different degrees of demand dependent on location.
Attached townhouses are common, however a detached townhouse on a single title is rather scarce. An attached townhouse in a complex will always have a price ceiling within that complex even if one hasn’t sold for a couple of years. Whereas a detached townhouse may be comparable to a house.
Conformed Housing and Apartments
New housing and apartments hold the least amount of scarcity. New housing in urban growth zones are conformed to each other while the same can be said for apartments in more affluent areas. These types of dwelling are the present and future of Australia’s modern property climate with plenty more on the horizon.
There are plenty more types of housing in Australia each with scarcity factor. Because scarcity has such a strong correlation with value it’s important to distinguish the level of scarcity when considering property as an investment tool. Through various types of property statistics we can determine the level of supply for houses and units along with other demand factors in order to make an informed decision.
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