Last week, the National Housing Finance & Investment Corporation (NHFIC) forecast that Greater Melbourne’s and Greater Sydney’s housing markets would be thrown into structural oversupply as immigration collapses:
With the release of the June quarter population figures from the ABS, I have plotted population growth against dwelling construction across Victoria and NSW in order to gauge the structural supply situation.
According to this data, Victoria is facing the biggest oversupply over the foreseeable future.
As shown below, Victoria’s population growth fell to 98,000 in the year to June 2020 versus commencements of 58,600 and completions of 64,800:
In a similar vein, 55,800 net dwellings were added to Victoria in the year to September 2020:
The structural oversupply is less extreme in NSW. NSW’s population growth fell to 76,700 in the year to June 2020 versus commencements of 49,300 and completions of 60,000:
In a similar vein, 52,300 net dwellings were added to NSW in the year to September 2020:
This dwelling glut helps to explain why rental vacancies across both markets has surged:
And apartment rents have plummeted since March:
Great news for renters.
