Housing demand projected to fall over 2021
Housing demand is projected to fall over this year and next due to the dramatic impact of COVID-19 on net overseas migration.
This is projected to result in new housing supply temporarily exceeding new demand, according to the National Housing Finance and Investment Corporation’s first major report on Australia’s housing market.
The report does add that any cumulative excess supply could be negligible if effective vaccines are available earlier and international borders re-open sooner than expected.
New housing supply could also be lower than projected if developers face greater difficulties in obtaining the level of pre-sales necessary to obtain project finance for new medium- to-high density developments.
The report follows much longer protracted periods of under-supply in the housing market.
"Notwithstanding a high degree of uncertainty around the path to economic recovery, we have also seen a great degree of resilience in the property sector," said Nathan Dal Bon, the chief executive officer of the government run, National Housing Finance and Investment Corporation.
"Due to historically low interest rates and government stimulus, construction activity and housing prices have held up better than many anticipated," he added.
"This highlights the challenges in the current forecasting environment and this should be considered when interpreting the projections in this report.
"The current shock is unprecedented in modern times and with this comes a highly unpredictable outlook.
The report noted the impact will also be uneven across different segments of the housing market, particularly for apartments, and for different locations across Australia.
