Quote:
Originally Posted by chemgear
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Only if it stays that way. As of now, that's a pretty narrow spike that was preceded by a spike the other way due to low population growth. Overall, in the last 3-4 years the housing start to working age population ratio has been about 2.6. So higher than historical averages, but not all that out of the ordinary.
It's also interesting that the lowest price growth for housing has been in eras that are mostly below the red line, while the fastest growth has been in periods above the red line. Here 's the annualized real property price growth in the below the red periods:
1979-1986: -1.3%
1990-2003: 0.0%
2017-2020: 2.2%
2022-2024: -10.8%
vs. the consistently above the red periods:
1986-1990: 9.3%
2003-2008: 8.2%
2010-2017: 5.7%
2020-2022: 12.8%
So they're inversely related; periods of fast supply increases relative to population growth see faster price appreciation, while periods of slow supply increases relative to population growth see prices stagnate or drop. Which makes some intuitive sense, as developers and investors will build more when they expect price appreciation in the near future. Which of course means that they're not anticipating price appreciation even in spite of fast population growth, and that's because that's not how it works. Look at US housing starts before and after 2008; they dropped by 80% to almost nothing for 4-5 years, and yet prices still kept dropping despite new supply drying up. Financial demand is what's important for price appreciation, not population growth.