The problem of low stock levels

Spring is usually a time when there’s more housing on the market, but this year’s low levels are causing alarm in some circles. There’s growing scarcity in investment-grade property, and buyers are spooked by reports of 25 per cent lower stock levels than this time last year.

Undersupply often begets a Catch-22 situation. Hesitant to upgrade to a bigger home when there are so few available, owner-occupiers are holding. Investors are also losing confidence, as house prices rise when demand outpaces supply.

Amid this, banks are imposing tighter loan standards, further limiting buyers’ purchasing-power. But while interest-rates remain low, it makes sense to investigate the rare pockets of opportunity that still exist in undervalued suburbs.

However, opportunities that might not be apparent to the average investor are still out there. For example, sourcing properties before they hit the market, and evaluating properties that are out of reach of most investors such as established blocks of flats.

Even in a volatile and uncertain marketplace, there are sensible ways for investors to gain ground amid the problem of housing undersupply.

Until next week,

Jock Bing