This week saw a number of separate pieces of research which showed the future for the housing market.
- the Australian Bureau of Statistics (ABS) published figures showing we are falling way short of building the target of 1.2 million new homes over the next five year
- rents increased to new all-time highs across all eight of the capital cities according to Cotality
There has been much hand-wringing on the state of the property market – with Cotality’s national Home Value Index (HVI) dropping 0.4 per cent marking the largest month-on-month fall since December 2022.
But we all need to take a Bex and lie down.
Much of the angst about the budget has been confected outrage from many in the property and finance industries whose concern may be more for their own bottom-line than Australian’s housing needs.
Here’s how things are likely to pan out.
Yes, home prices are falling and will do so for a few months.
But the fact is, we are still not building enough homes for our country’s needs and the gap between demand and supply is getting bigger.
To be on target to achieve the Housing Accord, 420,000 new dwellings should have been completed to the end of March 2026. Over that period only 307,635 dwellings have been completed which is a shortfall of 112,365 dwellings.
Meanwhile, many more people call Australia home. Treasury still forecasts significant numbers coming to Australia:
| Financial Year | Forecast Net Overseas Migration |
| 2026–27 | 245,000 |
| 2027–28 | 225,000 |
Ultimately, these forces will put a floor under falling home prices.
But who will buy these properties?
Undoubtedly, we will see a rebalancing of the housing market with greater focus on owner-occupation.
The removal of Capital Gains discounts and reductions in much negative gearing initially makes property investment less appealing.
But increased rents mean increased rental yields (especially if prices fall).
This may well entice different investors back into the market.
Sydney now has around 161,000 active rental listings, the lowest level since December 2017. But Sydney today is very different to Sydney in 2017, with around 520,000 more people living in Greater Sydney.
Sydney recorded the fastest increase in its rents in four years (a record average of $850 a week), while rental vacancies remained at record lows for the time of year.
The only way is up for rents.
Our industry may well be facing a tough few months. But we will recover after a Bex and a lie down.
