Where property demand is set to soar

Ivan Motley, founder of .id, a wholly owned subsidiary of PEXA, the ASX-listed e-conveyancing platform, said population growth was a key driver for housing supply.

“People go where there is somewhere to live,” he said. “Clearly there’s a shortage of housing and the lack of affordability, so we need to increase supply to address that.

“At the moment we’re not building enough dwellings to maintain stable vacancy rates and average household sizes.”

Melbourne is forecast to add 1.6 million people during the same period, outpacing Sydney’s predicted population growth of 1.2 million. Brisbane’s population is set to increase by 974,000 while Perth is expected to gain 979,000.

To meet the housing demand for those increases in population, an estimated 723,000 homes would be needed across Melbourne.

Sydney would need an additional 582000. Across Brisbane, an extra 381,000 homes are required while Perth would need 334,000.

Melbourne’s west, south-east and the inner city are forecast to post the strongest population growth, with nearly a million people set to be added in the next two decades. The combined population growth, which accounts for 46 per cent of Victoria’s overall population growth, will require 422,000 additional dwellings.

Within these regions, population growth is concentrated in certain suburbs such as Truganina, Mickleham and Cranbourne South.

Arjun Paliwal, head of research at InvestorKit said Melbourne was ripe for solid house price growth in the medium-to-long term boosted by increased demand from strong population growth and its lacklustre performance in the past few years.

“I think investors should position themselves in areas like Melbourne because having a lower price growth in a city that usually has a history of strong growth can actually be a good sign,” he said.

“Prices have not grown much over the last few years, so they will start to look more attractive. We’re also seeing rental growth really pick up, and it’s clear that the rental supply isn’t there, so cash flow will be more palatable.”

In Sydney, suburbs in the south-west, Blacktown, Parramatta and the inner city are predicted to rack up the strongest population growth over the next 20 years.

An additional 572,000 people are poised to move into those areas which would require an addition 267,000 dwellings.

Meanwhile, the report predicts new housing supply could be built in Riverstone, Penrith, Leppington, Campbelltown, Gilead, Parramatta and Sydney city during the same period.