Melbourne and Sydney property supply swells

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.

Unconventional Economist
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Comments

    • The90kwbeastMEMBER

      Full disclosure, haven’t read the report, but I suspect a large part of the oversupply is apartment buildings and townhouses, and not torrens title houses per se.

      So to add to your comment, torrens title houses will go to the moon and only able to be afforded by those that already own one and are up/downsizing, whilst poorly made strata apartments & townhouses will be availiable to the masses at much cheaper prices/rents.

      • Anecdotally only, but within 100-200 metres of my place, half a dozen free standing units and small houses up for rent for months.
        I’ve never seen that around here. Those properties usually turnover really quickly.
        And we were looking( for family members) about6-7 years ago, and rents are down, in places I’ve been through, 25-30% of the asking price back then.
        In 3185

  1. Meantime … New Zealand …

    … No wonder the latest IPSOS Issues Monitors find that ‘housing’ is a major concern of 53% (highest on record) of New Zealanders (up from 37% in the previous quarter) … 16% of Australians … 14% of the British …

    … New Zealand has by far and away the worst housing crisis at a national level within the English – speaking world (Demographia Housing Affordability Surveys) … and by far and away the highest homelessness rate in the OECD (latest ANZ Bank Economics Unit Report) …

    Residents express hopelessness as houses in poverty-hit Ōtara sell for $1m … Jordan Bond … Radio New Zealand

    https://www.rnz.co.nz/news/national/433354/residents-express-hopelessness-as-houses-in-poverty-hit-otara-sell-for-1m

    Million-dollar houses are now being sold in one of Auckland’s lowest-income suburbs and a local politician says government failure is allowing the market to drive further inequality and hopelessness.

    Last month an unremarkable 1960s weatherboard house on less than a quarter acre section in Ōtara in South Auckland sold for $1.01 million.

    Another – which 12 years ago sold for $340,000 – went for $1.1m, more than triple its last sale price in October. … read more via hyperlink above …
    .
    .
    … Wow … a Wellington example … Poor Porirua has the most hyperinflated residential rents …

    ‘Desperation’ for homes driving rent prices up in small-town New Zealand … Vita Molyneux … Newshub

    https://www.newshub.co.nz/home/new-zealand/2020/12/desperation-for-homes-driving-rent-prices-up-in-small-town-new-zealand.html

    … concluding …

    … The fact that people are willing to live in overcrowded homes is a perfect example of the crisis, says (local Northland marae chair Dolly …) Baker.

    “They don’t care about the price, about the crowding – desperation drives people to do whatever they need to do.”

    It’s a similar story across the country – recently Porirua, a suburb outside of Wellington, hit headlines as the most expensive place to rent in New Zealand with an eye-watering average rent of $625 per week.

    It’s a lower socioeconomic area – data from the 2013 census shows 25.4 percent of those employed are on low incomes and 8.3 percent have no income at all. More than 30 percent of Porirua are renters, and a 2018 report found 20 percent of children lived in overcrowded houses, and a quarter were in homes that were damp and mouldy. … VIEW AND READ MORE via hyperlink above …

  2. Lerdsila Chumpairtour

    Future projections plus discounting immigration does not equal supply swelling or structural oversupply. It is not a one turn game. And immigration will be increased to fill those future projections.

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