If you want to make money from property or any other commodity, for that matter – you need to buy where there is an undersupply.
It’s worth noting that the Australian population grew by 445,900 people in 2024. Roughly 25 per cent came from a natural increase (more births than deaths), while the balance was a result of overseas migration.
Here are the state-by-state increases:
Source: ABS, National, state and territory population
From this, you can see that Victoria continues to be Australia’s fastest growing state by quite a margin, followed by New South Wales and Queensland. Western Australia and South Australia follow, with the rest of the country showing very little population growth.
This effectively reflects our demand for housing. We need roughly one new house for every two new Australians.
As an aside and by way of explanation, the average house has 2.5 people living in it, but because three-quarters of our population growth comes from overseas migration (mostly singles and couples), the number is lower than average for houses needing to be built.
Here is what each state needs to be building to keep up with this growth:
Source: ABS, National, state and territory population
This is, effectively, our demand for housing and it raises the question: where is there an under and over-supply?
We built 168,000 new houses – 55,000 short of the amount we needed to build. Australia, more broadly, is considerably undersupplied.
Like with population, not every state is the same when it comes to this, as you can see below:
Source: ABS, Building activity
From this, Queensland and Western Australia were the most under-supplied, followed by NSW and WA. South Australia, Tasmania and the ACT were the only ones able to meet demand.
No coincidence that these figures mirror house and rent price growth across 2024.
Having said that, the past isn’t necessarily a reflection of the future (otherwise the Rich 250 would be a list of librarians).
Where it gets interesting is when you look at housing starts (as opposed to completions):
Source: ABS, Building activity
Housing starts are effectively a 12-month lead indicator of how many houses we will build in 2025.
There are two takeaways here:
- If our population growth continues at this rate, we will likely see even bigger shortfalls in 2025 – particularly in the ‘big 4’.
- Victoria is the big mover. All these tax changes discouraging property investment mean housing supply is on the nose in Australia’s fastest growing State. Its shortfall will double next year.
Property is a commodity, which means that undersupply leads to price and rent growth, just as oversupply results in the opposite.
These are the high-level numbers. Each suburb and property type will vary when it comes to over and undersupply.
You want to have a good experience with property investment? Go where the undersupply is.
There is only truth in numbers and these numbers are just about the most important numbers you can know (aside from your cash flow as I wrote last week). Three rules for holding onto property for life.
