Sydney and Melbourne Population Boom Will Keep Property Prices High: 5 Facts You Need to Know

01/07/2017 3:19 am

A potential population boom in wannabe First Home Buyers (FHB), is expected to result in huge surge in housing market demand.

With release of the ABS Census data this week man expected have been looking into how demographic changes will impact the real estate market.

1. The Key segment is the prime Gen Y FHB candidates

As it is not simply the size and growth in population that drives housing demand but the number of particular types of people.

2. Australia is aging, buy Gen Y is a big factor

ABS Data in Pictures 2017 Melbourne

The census showed that Australia overall is aging, however there has been a growth in the number of people aged between 25 to 32. Sydney and Melbourne have a comparatively high share of their population pyramid sitting in the 25 to 34 age brackets.

3. Millennials living at home will eventually increase demand for housing

Many in the Gen Y segment can not afford to buy a home and as a result they are stuck living in their parents basement. However, eventually they will join the rental market. Which will result in increased demand for housing.

4. Building Approvals Have Peaked

Housing construction, while still strong, it is expected to substantially decline. A force of increased demand from the Gen Y's and decreased supply will move prices higher. This segment is expected significantly build over the next few years as housing unit construction is falling away.

5. Developers have not overbuilt

Consensus is that housing construction has outpaced population growth and that developers are in trouble. An alternative view is that the recent growth in construction is trying to keep pace with the population after years of under-building. While, developers in Brisbane and Melbourne have found trouble by getting ahead of demand, it looks like the industry as whole has slowed down.