Demand for housing will be disrupted by the decline in population growth, caused mostly by stalled net overseas migration (NOM) amid international border closures to curtail the spread of the coronavirus.

With annual population growth across Australia slowing down from 1.4 percent (pre-COVID-19) to 0.6 percent through the 2020-21 financial year, the rate of population growth, a driver of underlying housing demand will be the lowest since 1917.

A drop in low NOM will likely result in a higher volume of rent listings and falling rent values across key inner-city precincts. For the foreseeable term until overseas students are back investors who own property in these locations are likely to be facing high vacancy rates, lower rents and reduced ability to service their mortgage. This may lead to more distressed sale listings as well as more units settling with a lower valuation than the contract price.

The lower rates of migration would likely have the biggest impact on Melbourne and Sydney.

With migration levels remaining on the lower side until borders reopen, organic drivers of housing are likely to become more important. The local economic and labour market conditions are key draw cards as well as lifestyle and housing prices. Some major regional areas are benefitting from increased demand as those looking to escape large cities seek to take advantage of remote-working opportunities, more affordable housing options and lifestyle considerations.