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  • Money Magazine

    NEWS & VIEWS

    Sep 01, 2021 6 minutes

    THE BUZZ

    Gloom versus boom in the property inferno

    In the midst of the Covid crisis, why has property been booming? Since early 2020 we’ve been buried in gloom and doom news reports about the struggling economy. Lockdowns are seeing 60% of Aussies confined to their homes, and with international borders closed indefinitely population growth has ground to a halt.

    Despite this negative backdrop, house prices continue to boom. According to the latest CoreLogic figures, dwelling values have soared nationally by an average of 14% over the past seven months, with strong price rises occurring in 94% of regions across the country. In this climate, it doesn’t make sense.

    To understand this we need to compare residential property to grass fire, where three things are required to burn – fuel, heat and oxygen. The fuel is the number of properties for sale, the heat is the level of demand and the oxygen is money supply.

    This property inferno comes down to two words: scarcity and spend. Scarcity has been created by limited

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