El Nino and Housing Shortages: The Dual Challenges Facing Australia’s Property Market - Property Inc

El Nino and Housing Shortages: The Dual Challenges Facing Australia’s Property Market

Australia is facing a potential dual challenge in the property market: the looming effects of El Nino on housing prices and a chronic undersupply of housing amidst soaring living costs. As experts weigh in on these challenges, the concerns of buyers, homeowners, and renters are being brought to the forefront.

In a recent article by Kylie Dulhunty, she discusses the potential knock-on effects of El Nino on Australia’s property market. El Nino, a weather event characterized by warmer than normal Pacific Ocean waters affecting global weather patterns, is anticipated to indirectly affect property prices. Lloyd Edge, Founder of Aus Property Professionals and property author, highlights the broader economic impacts, stating, “Food costs will go up, energy costs will go up and then that can lead to higher inflation and put downward pressure on property prices as the cost of living goes higher”. This could potentially prompt the RBA to reconsider its stance on interest rates, especially if inflation rises due to these increased costs.

Dr. Karl Braganza, Climate Manager at the Bureau of Meteorology, has confirmed an El Nino weather event, stating that both El Niño and a positive Indian Ocean Dipole (IOD) tend to draw rain away from Australia. This combined impact could lead to higher temperatures and below-average rainfall across the continent. In preparation, Edge recommends that homeowners consider environmental impacts, including the increased risk of bushfires. He suggests measures like having efficient appliances and considering energy-saving devices to make properties more appealing to prospective buyers.

On the other side of the property coin, Ben Dorrington points to the growing housing shortage as a significant concern. Ranisha Clarke, Managing Director at Lendlease Communities, emphasizes the need for a coordinated government approach to accelerate home building across Australia. She states, “We know it needs to be a coordinated approach, with all levels of government, and what I’d like to see is speed and certainty through which those commitments are made”. The recent target set by federal, state, and territory governments to build 1.2 million new homes over five years is seen as a positive step, though uncertainties remain about its execution.

Clarke also sees the current turbulent times as an opportunity for home developers to innovate and offer different solutions to help home buyers. Lendlease Communities, for instance, is exploring ways to provide more affordable home-and-land packages and potentially smaller or different homes to make it easier for people to enter the market.

In conclusion, as Australia grapples with the potential effects of El Nino and an undersupply of housing, the need for strategic planning, innovation, and government coordination becomes increasingly evident. Only with a holistic approach can the country navigate these challenges and ensure a stable property market for all its residents.

References:

Dulhunty, Kylie. “El Nino’s knock-on effect: How weather could impact Australia’s property market.” ↩ https://eliteagent.com/el-ninos-knock-on-effect-how-weather-could-impact-australias-property-market/ 

Dorrington, Ben. “What’s needed to accelerate home building amid growing supply shortage.” ↩ https://www.realestate.com.au/news/whats-needed-to-accelerate-home-building-amid-growing-supply-shortage/ 

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