"No doubt there was a change in housing preferences. But why wouldn’t those also occur if the market suddenly increased supply in the absence of the COVID experiment?"
A post-hoc explanation is covid causing two shocks with different timings. There was a first "two weeks to flatten the curve" uncertainty shock that lasted a number of months where people put their moves/purchases on hold and bunkered down with what they had access to - a negative demand shock in cities. This phased into a "new normal" positive demand shock where people realized Work-From-Home would likely last for years and employers committed to no return-to-office for some time or even forever. In this second phase, later in 2020 and 2021 and likely still being worked-out, that demand really picked up rural and urban as people made purchasing decisions for home offices and extra space; the historical person/household metric became a large undercount of demand if it was ever so reliable in the first place.
This then wouldn't have happened with absence of covid because there wouldn't have been the new WFH demand.
Nice characterisation, Ben. I think your storyline basically matches the different phases of the pandemic.
For cities that lost population and thus had empty housing, figuring out why that housing filled up again is a challenging task. Demand for extra space spurred by changing preferences, like you discuss, is one cause. Demand for extra resulting from space being cheaper is another.
I don't think the questions well joined. Lots of things happen so that when A follows B it will be hard to figure out the cause. To me the questions is, would a relaxation in legal/regulatory restriction X in place Y be a good thing to do. The "good" might take the form of lower purchase prices or rental rates in place Y. But if not, so what?
"No doubt there was a change in housing preferences. But why wouldn’t those also occur if the market suddenly increased supply in the absence of the COVID experiment?"
A post-hoc explanation is covid causing two shocks with different timings. There was a first "two weeks to flatten the curve" uncertainty shock that lasted a number of months where people put their moves/purchases on hold and bunkered down with what they had access to - a negative demand shock in cities. This phased into a "new normal" positive demand shock where people realized Work-From-Home would likely last for years and employers committed to no return-to-office for some time or even forever. In this second phase, later in 2020 and 2021 and likely still being worked-out, that demand really picked up rural and urban as people made purchasing decisions for home offices and extra space; the historical person/household metric became a large undercount of demand if it was ever so reliable in the first place.
This then wouldn't have happened with absence of covid because there wouldn't have been the new WFH demand.
Nice characterisation, Ben. I think your storyline basically matches the different phases of the pandemic.
For cities that lost population and thus had empty housing, figuring out why that housing filled up again is a challenging task. Demand for extra space spurred by changing preferences, like you discuss, is one cause. Demand for extra resulting from space being cheaper is another.
Excellent analysis again Cameron
Are the numbers inflation adjusted (even just CPI excluding dwellings).
If so, did rents really increase 20% in cpi adjusted terms from 2012 to 2020? Seems a bit high.
If not, the graphs are simply misleading considering the high level of inflation in the last two years.
I found this graph: https://content.api.news/v3/images/bin/fdb3c05cb37d0f2f61966d32d107b3ba
Source: https://www.theaustralian.com.au/breaking-news/australias-rental-crisis-laid-bare-in-damning-report/news-story/ed0aeb353d575894a32a89d33893f2d3
Which suggests the numbers are not adjusted for inflation. Quick mental adjustment indicates were below the 2020 peak.
Again, if the graphs are not adjusted, they're simply meaningless.
You can compare to housing in other cities or to prices of other goods and services. Rental pattern is very similar to sydney
Sorry, I don't understand how that answers my concerns.
Yes, comparing to other goods and services is equivalent to adjusting for inflation.
But it doesn't seem like the data presented in this post undergone this comparison.
Comparing to Sydney would make some sense, unless it was subject to similar shocks.
I don't think the questions well joined. Lots of things happen so that when A follows B it will be hard to figure out the cause. To me the questions is, would a relaxation in legal/regulatory restriction X in place Y be a good thing to do. The "good" might take the form of lower purchase prices or rental rates in place Y. But if not, so what?