Migration-Driven Demand Meets Supply Challenges

Net overseas migration continues to drive Victoria’s population growth, with the state drawing nearly one-third of new residents nationwide. This steady growth is supporting demand for townhomes and apartments, even as affordably pressures continue to influence buyer and renter behaviours.

Despite this demand, supply remains at a bottleneck. While apartment approvals rebounded in Q3 2024, tripling from the previous quarter’s historic low, annual numbers remain weak. Rising construction costs are further dampening project feasibility and exacerbating the supply gap.

Affordability also continues to be a defining factor. With a 46% price gap between houses and units, units appear undervalued – offering potential opportunities for investors. However, the stark disparity between high construction costs and lower resale prices continues to challenge developers’ ability to meet demand.

Looking ahead, migration-driven demand and entrenched supply shortages will likely sustain price and rent stability in the near term. However, the market’s long-term trajectory hinges on better addressing these imbalances.