Aussie property faces a demand problem

The AFR’s Robert Harley believes that Australia’s property market is facing a demand problem as collapsing immigration collides with pulled forward construction:

Australia is not short of new housing, not after the recent boom.

Treasury, which is forecasting a 7 per cent rise in housing investment in 2021-22, reported that HomeBuilder, along with other housing policies and low interest rates, is actually “pulling forward demand”.

At the same time, one of the fundamental drivers of new housing demand – population growth – has stopped, largely due to the collapse in migration…

Fewer new people need fewer new homes. The Morrison government’s National Housing Finance and Investment Corporation (NHFIC) last month estimated that the demand for new housing would drop by 129,000 to 232,000 dwellings over the next three years…

Rod Fehring, one of the highly regarded leaders of the nation’s housing industry and chairman of both Frasers Property Australia and the new National Affordable Housing Alliance, warns of a “gulch” opening in new home building.

The data speaks for itself.

Net overseas migration (NOM) is forecast by the Australian Treasury to turn negative over the next two financial years to the tune of -71,600 in 2020-21 and -21,600 in 2021-22:

Accordingly, Australia’s annual population growth is projected to crater to around 50,000 in March next year, a far cry from the 380,000 population growth recorded prior to the COVID-19 crisis.

The implications for the housing market is obvious, with Australia facing a large supply glut.

Again, population growth nationally is projected to bottom around 50,000 versus construction of around 180,000 dwellings:

The migrant hotspots of Melbourne and Sydney are facing the biggest gluts.

Annual population growth in Victoria is forecast to bottom at 13,000 in June 2021 versus dwelling construction of around 60,000:

Whereas NSW’s population is forecast to decline by 2,000 in the year to June 2021 versus dwelling construction of around 45,000:

While HomeBuilder and the First Home Loan Deposit Scheme will pull forward demand for new properties, they will also leave a bigger demand hole next year just as population growth collapses.

Absolutely the Australian property market is facing an acute demand problem.

Leith van Onselen
Latest posts by Leith van Onselen (see all)


  1. If this occurs, it will be years in the making. Australia is still very wealthy, relatively speaking, and any drop in piece will entice new buyers. We don’t have a Detroit or a Southern Italy… our birth rate, although not brilliant, is sort of OK.

    • Birth rates are almost certain to plummet as the economic crisis deepens. Who has a child by choice when they are surrounded by almost unprecedented economically uncertainty? The 2020’s are likely to be the decade of the anti-boomers.

      • boomengineeringMEMBER

        Could be a while then as some say the deficit, if all goes well will be paid off by 2060- 70.

        • boomengineeringMEMBER

          And judging by this mornings ride ( back already) the population will decrease. Astounding, runners, walkers on the middle of the road wearing black with no lights.
          Definitely preferable to be riddiculed as a Mamil or Oamil.

          • I have noticed since COVID a lot more outward displays of ‘get out of my way’ ‘I am not here to share’ on the roads / foot paths / shopping aisles. I put it down to the stress of it all.

      • Jumping jack flash

        Im not so sure.
        People rarely have children rationally. It kind of just happens you know.
        Nothing like boredom to give it a kick either. What else do you do if you dont need to get out of bed?

        • Also, most young people are politically and economically clueless – my kids’ a case in point – totally undeterred, both planning kids soon 🙁

          • There’s a peak time in your life where you can have children; yes it isn’t great when the economics doesn’t work but that’s what many people are “doing it all for” – their families. For a lot of people a family is a life goal they want to achieve. Tbh if we lived in a childless society a lot of people wouldn’t work nearly as hard as they do; nothing like hungry kids at home to get you out of bed in the morning, take on a mortgage, etc.

          • Arthur Schopenhauer

            It’s not your kids drt15, it is the will of a couple’s unborn child pushing them together (to paraphrase a grumpy German philosopher).

      • Mr SquiggleMEMBER

        Hot blooded millennials have children when they are locked up. It’s inevitable.

        The real crisis from COVID won’t be felt in ICUs in hospitals. It will be felt in maternity wards in about nine months time

        • Apparently that’s nonsense — just a meme that sprang up during Covid. No baby boom on the way, which makes sense, given economic uncertainty.

          • Mr SquiggleMEMBER

            I’m not a parent myself but I understood pregnancies are kept mostly secret until month 3 for, well, lots of reasons basically.

          • It’s true, it’s not transpired. More couples separated. But if they want more babies they just need to do a baby bonus again. Yes it’s the wrong people breeding but when has that ever mattered

      • I just had a child. I may be crazy but I always saw myself with a little boy and a girl. Although I don’t get to pick the gender. I have a little boy now. It’s loads of hard work, but my mortgage is manageable. So I’m considering having another and doing my part.

        But family can often support you (grandparents) and I can say my parents love the new addition and if it came down to a financial decision not to have another I’m sure they would interject.

        Granted I know I’m in a better position financially than many. But lots of people have kids and have no money. That’s where the state steps in I guess.

        • Arthur Schopenhauer

          If children were brought into the world by an act of pure reason alone, would the human race continue to exist? Would not a man rather have so much sympathy with the coming generation as to spare it the burden of existence, or at any rate not take it upon himself to impose that burden upon it in cold blood?


          The real Arthur Schopenhauer

        • o I’m considering having another and doing my part.

          Having kids now is incredibly ill-advised. See the new Attenborough movie “David Attenborough: A Life On Our Planet”

        • Having kids was the best thing I have done. I limited it to 2 because of Paul Ehrlich. At the time I didn’t know he was such an idiot.

        • innocent bystanderMEMBER

          But lots of people have kids and have no money. That’s where the state steps in I guess.

          Lots of people who have no money have kids. That’s where the State steps in. KidKeeper.

          • Yep. Finances are seldom a reason not to have kids in Australia. Some have them to keep the funds coming in.

        • To quote Gavin in 17 years time.

          Teenagers!, I didn’t want that!

          Then a distant voice from outside his mind.

          Yes you did, now give me the car keys dad.

        • I have to convince the missus first. I think she’s 1 and done. I don’t blame her. But as I said. I just always pictured myself with 2. No more however..

      • A lack of new buyers at the same time that vacancy rates are going through the roof and investors trying to offload their dogboxes. Expect all sorts of incentives for FHBs to step in to fill demand. The Homebuilder won’t cut it for reasons stated above. It’s why the housing industry was whining about FHB incentives not being eligible for exisitng properties. How are investors meant to extricate themselves from the pincer movement of high vacancies and no greater fools.
        High rise apartments are going to get alot cheaper.

  2. pfh007.comMEMBER

    If there is a demand problem it is about as visible as a Tassie Tiger in most postcodes across Australia.

    A national vacancy rate of less than 3% with new constructions crunching is not a demand problem.

    The problem remains too little supply for a rapidly growing population.

    The National Vacancy rate shows how we never caught up.

    When the National vacancy rate reaches 5% then we will have a HEALTHY housing market.

    Too many people are confusing the Big Australia bleatings of the property sector desperate to open the international borders with reality.

    • Jumping jack flash

      Too little supply for the rapidly growing debt.
      Even though debt is certainly not growing fast enough and hasnt for 10 years, they have a plan.

      Debt-fueled demand is a wonderful thing. You can never have enough to keep up with the demand when money is no object.

      • pfh007.comMEMBER

        Yes, when the central bank and the govt has deemed property ownership as next to godliness there can never be enough.

        Who doesn’t want a house in the burbs and one up the coast and perhaps a flat in the CBD?

        Short of regulation stopping this it means there is lots of potential demand as the price of money hits NIRP and ZIRP.

  3. Totes BeWokeMEMBER

    “The three Ps — population, participation, productivity.” Opposition Treasury spokesman Jim Chalmers said the government”……Yesterday in the parliament.

    Immigration will be restarted faster than anyone could imagine. 14 day quarantine isn’t even a hurdle when it comes to feeding the elites Australia and our kids futures.

    Jobs? Immigrants create jobs remember?

    In just 5 years 1 million jobs were created by bringing in 2 million people. What a plan.

    Labor, helping LNP bring Australians to their knees.

  4. happy valleyMEMBER

    Our federal and state/territory governments deserve to find out care of ScoVID-19 what it is like to run an economy when you can’t be a one-trick pony depending on an ever-increasing number of warm bodies. The easy days of crush loading are over for a year or two at least and what a pleasant change that will be.

    • +1 There’s just wee a chance that maybe even complacent Strayans might have woken to the immigration Ponzi by then….

    • Riddle me this:
      – People expect the Govt to ‘run’ the economy
      – The vast majority of politicians and bureaucrats have never had a job in the real world
      – What qualifies these people to ‘run’ an economy then?
      – Do they have a manual perhaps, provided by a management consultancy?
      – Or a Supreme Being?

      When you boil it down, no Gubbermint should be running anything. They couldn’t reasonably run a sh1t fight on a sewerage farm.

      • Shades of MessinaMEMBER

        There are also a lot of corporate CEO’s/Directors/Managers whose job is to run companies who are as useless as tits on a bull.

        The private sector is not where the answers lie when considering how to develop an effective Public Service model. Making sure politics doesn’t over-ride sensible thinking would be a good start.

  5. Jumping jack flash

    “Net overseas migration (NOM) is forecast by the Australian Treasury to turn negative…”
    Only a forecast.
    And they already have a plan to counter it. Surely that was the point of it if they realise and then act quickly.

    “Advanced manufacturing”, anyone?

  6. Totes BeWokeMEMBER

    I would make a $1000 bet with anyone who wants, that the number of people in Australia in 18 months time is 400k higher than today.

    LNP, Labor, big business, regulators, and MSM all agree it’s a GREAT idea……and us muppets keep voting for it.

    Nothing’s going to stop them.

    • Jumping jack flash

      In an economy based on nothing but debt growth to simulate economic growth it is essential. The alternative is not an option.

      • But when every dollar of debt gives less and less growth we will need more and more vibrants, not going to work forever

        • Jumping jack flash

          Of course. This is why it is all hinged on eligibility above everything else.
          If immigrants arrive and they’re not eligible for the gargantuan amount of debt that is required then what is the point of them.

          Everything that has been done over the past 20 years has all been about debt eligibility. We reached the limit of conventional unconventional policy of interest rate manipulation just recently, so that just leaves unconventional unconventional policy, whatever that may end up being.

    • I wouldn’t take that bet without better odds (i.e. I win more than you do). It is the system and how the corruption in this country works. Everyone wants more people expect for the guy on the ground trying to get by doing all the work.

    • It would only take a few disgruntled locals bashing a few foreigners to disrupt the flow of people. Perception is a powerful motivator.

      • Isn’t a better idea is to channel that rage to relevant party responsible, Robert? It will be big news and others won’t contemplate for many election cycles – perception is a powerful motivator!

    • I feel the tide turning. Yes they will try to restart immigration but it won’t be what it was for years. What has happened in Melbourne, the lockdown, the mass unemployment, the anger. If you think most people here will welcome mass immigration anytime soon you are mistaken.

      • Totes BeWokeMEMBER

        I agree. People don’t want it. 80% in some polls.

        We will be given it, and there’s not a thing we can do about it.

        • SupperannuationMEMBER

          I spoke to my local MP recently. She told me that she was very interested in immigration. I took that as interested in increasing it.

        • What is needed is some influential, respected, coherent and rational millennials to voice their disapproval of our reliance on immigration for our economy. Someone who can articulately repudiate this nonsense and gently talk down those who try to frame it as shameful and racist. That Friendly Jeordies chap would be ideal.

          Unfortunately it seems unikely.

          • Totes BeWokeMEMBER

            He would be ideal.

            MB should try and convince him. He’s a smart guy but he is very naive.

            It’d seem he’s funded by Labor, but he does seem to have a bit of integrity. I think he’d be open to being shown how corrupt Labor actually are.

          • As if that Labor sh1ll will speak out against immigration. People are becoming a bit naive on this website.

          • Totes BeWokeMEMBER

            Go Armenia

            Both Hareeba and myself see him for what he is. That’s not naive. That’s hopeful.

          • No one’s gonna throw their career away for the immigration issue. The only one who’s going to do something about it is someone who goes hard on it from the beginning. This is the same reason why politicians constantly betray us. As soon as your paycheque and livelihood becomes contingent on saying the right things, that’s what you do.

          • Totes BeWokeMEMBER

            “No one’s gonna throw their career away for the immigration issue”

            He’s been on YouTube way longer than he’s been plugging Labor. My guess is they approached him, knowing he leans a long way left.

            Like I said he seems to have integrity and would therefore address the truth if he understood what that was.

            There are many things that guy could do as a career, selling his soul IMO isn’t one of them.

            He is the ideal anti immigration ambassador.

          • dosbitzelMEMBER

            He has said before that an open border policy is a Koch brothers policy so I don’t think it’s a stretch that he’d jump on the anti turbo charged immigration band wagon. He also let Kristina Keneally explain her recent somewhat faux anti immigration stance so there is hope he could take up the torch and lead the kids who tune in to his channel to wrestle their futures back.

    • No one in Vic I’ve spoken to recently (admittedly not many people) want’s it, but they all resignedly think we’re going to get it. I’m not game enough to take that bet.

  7. Might be a supply and demand problem as it looks as though the banks are nowhere near the point of dishing out easy money to warm bodies.

    Case 1 is a guy who’s still employed in the finance sector and dabbles in townhouse development. Bought a decent site in NE suburbs of Melbourne a year ago, finance arranged but suddenly the bank pulls his construction loans. So he’s now sitting on a useless site unable to get previously committed funds to build.

    Case 2 is another guy with unencumbered assets of at least $4m, stable income from a solid business, looking to pick up a coastal unit for about $600K. Small loan, but aged in his late 50s. Sorry. They would have been knocking down his door 18 months ago.

    From a Level 2 at one of the big four just days ago, this hasn’t even started yet.

    • pfh007.comMEMBER

      You will get plenty of hearts beating faster around here with that kind of ‘dirty talk’.

      Keep it coming!

    • Arthur Schopenhauer

      Looking around the leafy North East of Melbourne, all the sites that have been empty for the past few years have started groundworks.
      Even a couple of sites where the developer stopped and seemed to have gone broke have restarted.
      Credit is flowing from somewhere, but maybe not the Big 4.

        • Arthur Schopenhauer

          There were two sites that had the tell tale signs of bankruptcy. One of the sites has new hoardings with a different company name. Maybe they phoenixed?

          Whatever the case, credit is flowing.

    • @jimbo: Interesting anecdata and it does tie in the urgency of an immigration restart because in the current (and foreseeable future) conditions, Banks want OO only:

      – owner has maximum skin in game i.e. will eat noodles and light place with candles in preference to getting tossed out
      – every known metric will tell you your default rate for owners is always going to be lower than for investors (my guess – happy to be shown to be wrong)
      – force selling low quality construction dog boxes (currently known as ‘investor grade’) in volume will be a bad look for the partial returns, and for the media howling that the banks are ‘giving away’/’fire selling’ people’s properties – that is if they can find buyers anyway
      – even taking possession of these things as a mortgagee is fraught: in at least NSW and VIc, if you enter into mortgagee possession you become liable for all strata levies that are outstanding and new ones that come due and that includes those massive one off levies to fund cladding removal etc

      There is one pipeline of new OOs who will live in these things and hence head off the demand AND the quality problem. It doesn’t start onshore.

      So yes, the lobbying for the taps to be turned on full blast will be intense

    • But surely this would bring in new investment and money that can be spent on public beaches in…other places.

      • Totes BeWokeMEMBER

        ……..”“I reckon it’s a pretty appealing scene for a beach with 30,000 people to be in a section where it’s one per 30sq m,” he joked to Fitzy and Wippa this morning.”……….

        That’s entertainment Australian style. 3 Mega rich media guys have a gag, and the country doesn’t even realise we are the joke…. We are the joke.

      • Totes BeWokeMEMBER

        You’ll get the overflow of the unwashed at your beach from those who can’t afford Bondi.

        Taking your parking, leaving their rubbish etc etc.

    • Gees I hope someone doesn’t accidentally drop a huge bag of blood and bone right on the ‘public’ side of the roped off area.

      • Totes BeWokeMEMBER

        I was fantasising much more sinister than that, but it’s not my kind of thing but I am getting pretty fking angry.

        “huge bag of blood and bone” i could actually do without too much guilt. I like it.

      • Totes BeWokeMEMBER

        Although the FB site, invites debate, they’re not receiving counter comments today or any other day.

        A microcosm of Australia.

      • TailorTrashMEMBER

        I suggested the punters visiting Bondi should all arm them selves with a six pack of eggs ( preferably rotten )
        A n after noon of 20-30000 raining eggs might discourage that venture

    • Charles MartinMEMBER

      Bondi is a schithole, the so called “elites” can have it.
      There are 1000s of better beaches all around Australia.
      Bondi is just hype.

      • Totes BeWokeMEMBER

        I agree, but it has the hottest women per square metre anywhere in the world.

        AND, I’m opposed to thin ends of wedges being rammed in.

        This is public space, and if we put it up for sale we need our heads read. Money has corrupted everything in this country EXCEPT public spaces. Council would become addicted to the revenue and over the years it’d end up the entire beach at market rates.

        We should all fight for public space to remain public space.

        • I think if you’re opposed to thin edges of wedges being rammed in, Bondi beach may not be the place for you.

        • Charles MartinMEMBER

          I agree with the fight for public space, it should not be bought and sold at any rate, I just don’t get the hype of the place. It’s not beautiful, it’s a schit of a place to get to, it’s crowded etc. etc.

          But then you have the dumpster fire going on in Parramatta with moving that old house brick by brick to a new location for the PowerHouse. It’s the same bureaucracies that either come up with these brilliant ideas or approve them.

          I swear there is a hat somewhere with every bureaucrats fvck up of a second cousin or nephew builders name in it and they take turns to milk the never ending supply of money from the government. Or it’s just said bureaucrats lining themselves up for a cushy job.

          • Totes BeWokeMEMBER

            Ditto Venice, Paris, Kuta, Phuket, London, Vietnam, Amalfi coast. NY etc etc etc. All sht holes, but we flock to them. Who knows why!!!!

            I’m calling Waverley council to complain about the lack of debate.

          • Totes… ‘All sht holes, but we flock to them. Who knows why!!!!’
            I’ll tell you why, coz most of the population out there cannot or will not think for themselves (it’s all a bit hard) and therefore just go where they’re told, do what they’re told and talk about the same stuff as the rest so that they can fit in!
            Exactly the same reason that we have the apathy that all on this site are constantly bemoaning. I’m just basically over other people, but really glad that they prefer to flock to Bondi so that I can be with fewer people elsewhere!

          • Totes BeWokeMEMBER


            Yep. I’ve been to all the usual places but I’ve also extensively travelled outside them too. Almost all my best memories are from obscure out there places mixing with the locals and other off the track tourists.

            What a beautiful world. It’s very sad money is destroying absolutely everything.

          • TailorTrashMEMBER

            Yes totes but all those places you mention are
            ………“AMAZING “….dontcha know ….

    • Rorke's DriftMEMBER

      If people can’t comfortably sit at Bondi Beach, hence this paid area concept, then perhaps we have too many people living and visiting Australia. We live off iron ore and coal anyway, so wouldn’t need the tourism or the crushloading with a lower stable population.
      Immigration policy should perhaps be guided by whether you can still layout your towel on the sand at Sydney beaches. As good as any other metric.

      • Totes BeWokeMEMBER

        Exactly. The wealthy can take all the benefits of immigration, and with proposals like this suffer none of the consequences.

        My guess is it’ll go through because everyone wants it. Anyone who didn’t want it weren’t listened to.

        Microcosm of Australia.

        I’m buying a blender exclusively to juice up prawn heads.

      • Totes BeWokeMEMBER

        Just got off the phone. I reported that negative comments on the FB are being deleted along with page stating…”the overwhelming support for the proposal”.

        They said shoot us an email with your concerns about the proposal and include the deletions.

        [email protected]

  8. TailorTrashMEMBER

    A lack of demand for blocks of shoddy concrete
    suspended in the increasingly polluted air on dodgy foundations that come with huge maintenance fees in perpetuity. If people thought about it …there would be even less demand for this idea of “property “

  9. interested at thoughts on the tope end – don’t think homebuilder first home buyers etc will impact that market