Record high housing demand driven by supply shortage

There’s good news for property owners and investors, especially in Queensland where a recent report shows that property demand in Queensland has grown by 16.7 per cent over the last 12 months for all dwellings.

With property prices becoming increasingly more unaffordable, home buyers and property investors are turning their attention to the sunshine capital in search of a better and stronger property investment opportunity. The median dwelling price in Brisbane is approximately $470,000, compared to Sydney’s median dwelling price of $785,000 and Melbourne’s $590,000 according to a Corelogic report, as at September 30 2016.

It’s not just Queensland though that has seen a spike in housing demand. Data from the REA Group Property Demand Index also shows that the record high housing demand can be found throughout the country. Both New South Wales and Victoria are driving these record levels, despite being in a market that is slowing down after its booming market last year.

Demand for all dwellings increased 17 per cent


The first-ever REA Group Property Demand Index has found that demand for all dwellings had increased 17 per cent in the 12 months to September. The month of September experienced an increase of 3.1 per cent for houses and 1.9 per cent for apartments.

According to the report, the peak of demand for all dwellings occurred in April 2016, although Western Australia did see a softening of the market and a fall of 5.4 per cent in demand over the past 12 months which pulled figures down.

“Conditions are very different in Western Australia where we continue to see low demand on site. The bottom of the market appears to be some way off.” says Nerida Conisbee, REA group chief economist.

However, in spite of this, the REA Group Property Demand Index found that apartment demand is actually at an all-time high. New South Wales continues to have strong apartment demand, whilst Tasmania, helped by its affordability has the strongest apartment demand in the country.

Tasmania leads property growth


Tasmania experienced a phenomenal level of growth of 39.3 per cent over the past 12 months, followed by ACT at 32.2 per cent and then New South Wales. NSW saw demand grow by 23.7 per cent over the past 12 months, in spite of Sydney still recording some of the highest property prices in the country, which is not putting property buyers off.

Victoria was next in line closely on the heels of NSW with 22.3 per cent growth, whilst Queensland, which also has the benefit of housing affordability, saw an increase of 16.7 per cent. Both South Australia and Northern Territory were below the national average of 17 per cent with a growth of 8.5 per cent and 7 per cent respectively.

According to Conisbee, the index provided a more complete picture of the property market in Australia.

“What we’re seeing is that demand is at all-time highs, driven predominantly by a lack of supply, particularly in Sydney and Melbourne. Despite talk of oversupply and poor demand conditions, this result supports continued price growth in what are considered to be increasingly unaffordable markets,” she said.

This research clearly shows that there is not an oversupply of apartments. There is in fact a supply shortage which is driving record property demand in Australia. These results show that there is continued price growth, especially in markets which are deemed as increasingly unaffordable, and property prices in some cases are not putting buyers off.

So, what is driving housing demand?


There are many factors that are contributing to housing demand reaching a record high. Here are 5 reasons why:

1. Strong population growth

One of the main reasons which is driving housing demand reaching an all-time high is strong population growth. Major capital cities across Australia including Sydney, Melbourne and Brisbane are all seeing a rapidly rising population. Data from the ABS shows that Melbourne is the fastest growing capital city in Australia, with the city growing by 91,600 residents between 2014-2015, working out as 1,760 people per week. Melbourne is anticipated to become Australia’s largest capital city by 2056, overtaking Sydney, whilst Brisbane’s population is set to double, growing from 2.2 million in 2015 to reach 4.6 million by 2031.

2. Undersupply of residential housing

With a rapidly rising population, the housing markets across Australia are actually majorly undersupplied. Although there might be a high number of new apartments completing over the next few years, this level of new stock massively reduces after 2018, leaving a supply shortage in the market.

3. Low interest rates

Interest rates are at an all-time low, which is also spurring on this high level of housing demand. Low interest rates mean lower mortgage repayments, making a property purchase much more appealing. Interest rates are currently sitting at 1.50 per cent, and are expected by some to go down again, before they start to rise.

4. Strong and stable economy

Some of Australia’s capital cities, particularly Sydney and Melbourne both have strong and stable economies making a property investment here far more appealing. Unlike WA, they do not fully rely on one industry such as mining for their economy. There is tourism, banking, finance and education with growing professional services, as well as these new apartment developments contributing to a booming construction industry.

5. New developments and infrastructure

In order to help improve the liveability of our Australian capital cities, there are plenty of new developments and infrastructure under development to help revitalise the cities. Sydney has the new Western Sydney Airport at Badgerys Creek as well as the WestConnex transport network and the new city light rail line under completion.

Melbourne has Fishermans Bend, the largest urban renewal project, as well as a new underground, high speed rail line whilst Brisbane has the Queens Wharf Precinct, Brisbane Airport Redevelopments, Northshore Hamilton, Brisbane Live Entrainment Arena and the new International Cruise Terminal. Not only will these new developments create thousands of new jobs, but it will help improve the economy.

With housing demand reaching a record high, combined with a supply shortage, it will become increasingly harder to enter the property market due to rising property prices and more competition to go up against. At iBuyNew, we can help you find the right property within your budget and have hundreds of brand new properties to choose from across Sydney, Melbourne and Brisbane including new apartments, townhouses and house and land packages.

To get ahead of the competition, and ensure you have first pick of the best apartments on the market, why not get in touch with the iBuyNew team today. Give us a call on 1300 123 463 or send us an enquiry online and we will get back to you as soon as possible.
Published on 25th of October 2016 by Marty Stanowich
Marty Stanowich
Marty Stanowich

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