Housing demand to take dramatic hit as Australia's net migration slumps
The coronavirus pandemic could cut demand for housing in Australia by between 129,000 and 232,000 dwellings over the next three years, research by a federal government agency shows.
The National Housing Finance and Investment Corporation’s study found that population growth could be cut by 214,000 between 2019 and 2021, a 0.8% decline only surpassed by the first world war and the unwinding of the 1971 baby boom.
This is the result of international border closures that have effectively shut down net overseas migration, which has accounted for 59% of population growth since 2007.
International students account for 50% of migration and the study notes Covid-19 hotspots such as India and Brazil are large contributors to Australia’s pool of students.
“This research highlights the strong relationship between population growth, increasingly through net overseas migration, and underlying dwelling demand, with the outlook for population growth due to Covid-19 highly uncertain,” the corporation’s chief executive Nathan Dal Bon said.
Evidence from the global financial crisis suggests economic factors such as the unemployment rate and the exchange rate are also important for international students in selecting Australia.
“It took around four years after the global financial crisis for student numbers to recover to pre-GFC levels,” the report says.
The past two recessions also show rising unemployment tends to lead a decline in natural population growth.
“Australia’s second wave of infections is likely to further slow population growth, adding to the depth of the downturn and hindering the pace of recovery in underlying housing demand,” it says.