Last week the ABS released its construction activity report for the September quarter of 2020, which provided data on dwelling commencements and completions.
Below are charts plotting population growth against dwelling construction across Australia and the five major jurisdictions.
Below is the national picture:
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The above charts suggest that Victoria and NSW are facing periods of oversupply, whereas the other markets are relatively tight.
Victoria, in particular, is facing the biggest oversupply over the foreseeable future.
Victoria’s population growth fell to 98,000 in the year to June 2020 versus commencements of 60,333 and completions of 64,120 in the year to September.
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 50,426 and completions of 58,677:
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 across both markets:
The structural oversupply across Melbourne and Sydney is projected to worsen according to projections released last month by the National Housing Finance & Investment Corporation (NHFIC):
Great news for long suffering renters in both markets, who are benefitting directly from the immigration collapse.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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