by Sanjeev Sah | Feb 28, 2023 | Market Updates

Australia’s property markets generally conform to the law of supply and demand.

So, when there are more buyers than sellers, prices typically rise – as we saw over the recent boom. And, as the current downturn shows, the reverse is also true.

Longer-term factors also play a part in any supply-demand imbalances.  

For example, Australia’s population grew 8.6% between the 2016 and 2021 censuses, according to the Australian Bureau of Statistics. Naturally, that growing population adds pressure onto the country’s housing stock, which, in turn, means more properties need to be built (both to rent and to own)

But rising construction costs, labour shortages and supply chain disruptions are currently putting the brakes on construction levels – with the total number of new homes approved over 2022 falling 21.8% when compared to 2021, according to the Australian Bureau of Statistics (see image). 

When supply fails to keep up with demand, that puts upward pressure on property prices and rents.