Victoria’s population grew by 400,000 between 2011 and 2015. That may seem like a huge increase, but those are everyday numbers here in Australia’s most liveable city, and that rate of growth is unlikely to slow any time soon.
This could have wide ranging implications for the property market in wider Melbourne, changing the landscape for the buyers and sellers of the future.
Melbourne’s astronomical growth
Perhaps it’s because Melbourne consistently ranks as the best city in the world in terms of liveability, or perhaps people are attracted by the growth in the property market in Victoria. Whatever the reason, recent forecasts from the Department of Environment, Land, Water and Planning estimate the rate of population growth in Victoria will remain at around 1.7 per cent a year until 2031.
This means that the state’s population will grow by almost 80,000 this year, and by 1.8 million up to 2031 with the majority flocking to Melbourne. This will change the very fabric of the city and have a profound affect on the its housing market. What shape will these changes take?
The housing implications
The state’s population will grow by almost 80,000 this year, and by 1.8 million up to 2031.
An increase in population means an increase in demand for residential real estate, but are we capable of meeting this with adequate supply?
Forecasts put population growth up to 2031 at around 120,000 a year on average, and with an average household size of 2.1 that means we’ll have to build almost 60,000 homes just to keep up.
Housing Industry Association forecasts suggest the state’s going to fall far short of this number, by 4,000 this year and by over 10,000 for the following three years.
Your options as a homeowner
Simple economic theory says that a shortage of supply pushes up the price of any commodity. The same is true for property in Melbourne where these shortages will no doubt put upwards pressure on house prices over the next few years.
For current homeowners, this means that the value of your property will most likely only go up. For those looking to buy property in Melbourne and the surrounding areas, sooner may be better than later so that you can get into the market before prices skyrocket even further.