February 3, 2020


Accrue Real Estate


Jacinta Koelewyn

time lapse photo of people walking on pedestrian lane

The impact of population growth and urbanisation on real estate

The Australian housing market is currently being influenced by population changes, which is impacting the demand for new housing in both established and emerging suburbs. This is especially true for Melbourne and Sydney, with increasing migration and population booms. By 2031, Greater Melbourne’s population is projected to increase to 8 million, while Sydney is expected to reach 6.4 million in 2027.

The supply and demand for housing present a unique set of challenges to the real estate market, which functions within a delicate balance of micro and macro factors, including regulation and shifting public sentiment.

Stricter lending environment for investors

According to Knight Frank’s Australian Residential Development Review of 2019, The Australian Prudential Regulation Authority (APRA) has made moves to cool the residential market by tightening lending to investors and developers. The result has been many projects pushed back. Despite more apartment development across Australian cities, it may not be enough to keep up with our inner-city population growth.

High-density development sites are growing

More Australians are craving an inner-city lifestyle, with high-rises and townhouses preferred over the traditional quarter-acre block in the suburbs. Inner-city areas are popular because they’re close to public transport networks, amenities, services and work.

The Australian Residential Development Review reports that high-density developments made up 73.1% of all residential development sites in 2019.

With an ever-increasing city population, Australian cities such as Melbourne are following the same path as London and New York by servicing population growth with high-rise apartment living.

Income growth not keeping up with house prices

Increased population and income growth can have a direct impact on house prices. From 2012 to 2018, Melbourne’s housing prices increased by 50%, and Sydney’s by 70%. Australia’s property market is one of the most expensive in the world, and the ongoing influx of people to our cities may continue to put pressure on housing affordability. Our population is projected to reach 36 million by 2050, according to the University of Melbourne’s Faculty of Business and Economics.

Taking back your buying power

As Australia’s property market evolves, it’s more important than ever to be educated and in control of your financial position. Accrue Real Estate is here to guide you through the challenges and opportunities in the Australian property market, so you can buy with confidence. Get in contact with us today.

This is general advice and has been prepared without taking into account your particular situation or needs. You should consider whether it is appropriate for you before acting on it.