Can current rates of housing development be sustained?

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2 Responses

  1. Chris says:

    Wouldn’t it make sense that the period of decline of NOM during Covid19 would simply be matched by a similar period of oversupply of dwellings in the future and then it woupd correct itself?

    E.g. 300,000 less people for 3 months during Covid translates to an oversupply of say 100,000 homes for a similar period (if 3 people per household), which might increase vacancy rates for 3 months assuming nothing changes in the future new build pipeline.

    At most it is a 3 month problem?

    • Andrew Hedge says:

      Thanks for your comment Chris. Our view is that the housing construction industry and developers will adjust to changes in demand so, yes, in that sense there will be correcting. The correction will be significant however as we have 373,000 fewer people in Melbourne in 2031 compared to the pre covid view of the world. The construction and development timeframe of large apartment projects also means the overhang will be significant – new apartments being completed as demand deteriorates significantly.

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