Will Falling Commodity Prices Bring Developers Back Into The Property Market?

I have been doing some thinking over the past day or two as to what would actually burst the Australian house price bubble given that there seem to be a few things supporting house prices at the moment - the main two being low interest rates and an under supply.

However I feel that in like of rising unemployment low interest will be somewhat neglible, which lead me to think that what would eventually improve supply of housing within Australia, which lead me to wonder if the falling commodity prices over 2008 may significantly impact develops ability to produce lower cost residences?

Does anyone have any more information on this or has read anything recently that related to this sort of trending?

 

Chris

I can't help you with info but one thing is certain.

Developers won't be rushing out and start building because as we saw in recent times it is hard to get decent finance.

We are also in an environment where profits are low and/or questionable and I don't see the situation changing in a hurry.

Unfortunately housing construction is a big part of our economy
and many sectors will now be feeling the pain from the low level of construction.

cheers

 

Finance used to be hard to get, now it is getting easier and will continue to become easier over 2009. Plus rates have already dropped dramatically and will continue to drop which brings down a lot of costs. So if you couple this with the massive drops in commodities prices and a still very large demand for housing I don't see any reason why profit would remain low.

It's the same rationale that was used in the "time to renovate" article you psoted on here - the idea that building/renovating will soon becoming substancially cheaper.

Thus the reason I raised the question, will developers begin to re-enter the market once many of these savings begin being passed on more and potentially fill the demand for cheaper housing?