
Most read
Pros and cons: Working in the gig economy...
Pros and cons: Working in the gig economy...

Latest Podcast
Is the market overheating; should ETFs take your fancy, and what’s happening t...
Is the market overheating; should ETFs take your fancy, and what’s happening t...

Resources
There is $17.5 billion in lost and unclaimed super across ...
There is $17.5 billion in lost and unclaimed super across ...
Invest
3 reasons COVID-19 could fix Australia’s housing affordability crisis
As many first home buyers would know, Australia has a housing affordability crisis, with COVID-19 potentially fixing the issue, an economist has said.

3 reasons COVID-19 could fix Australia’s housing affordability crisis
As many first home buyers would know, Australia has a housing affordability crisis, with COVID-19 potentially fixing the issue, an economist has said.

According to AMP Capital’s Dr Shane Oliver, one of the lasting impacts from COVID-19 could be more affordable housing in Australia.
“The hit to the economy from coronavirus is bigger than anything seen in the post-war period. While most of the activity hit by lockdowns should bounce back once the virus is brought under control, some things will take longer to recover (e.g. travel and tourism), some will be permanently changed forever (e.g. a big shift to online shopping, education, healthcare and watching sports) and businesses will use the uncertainty to accelerate cost savings,” Dr Oliver said.
He pointed out that this will create a long tail for unemployment, putting pressure on house prices due to distressed sales.
“JobKeeper has shielded Australia from what otherwise would have been 15 per cent unemployment in April and 11 per cent unemployment now. But officially measured unemployment is still likely to hit 10 per cent by year end and will probably have only fallen to around 9 per cent by end 2021,” Dr Oliver said.
Dr Oliver also highlighted that immigration, which is a big driver of property prices, is taking a huge hit due to lockdowns and might take time to recover.
“Thanks to travel bans, net immigration is likely to have fallen to just below 170,000 in 2019-20 and to around 35,000 this financial year from 240,000 last financial year. This is a huge hit, which will take population growth in 2020-21 to just 0.7 per cent, its lowest since 1917,” the economist pointed out.
“This will reduce annual underlying demand for homes to around 120,000 dwellings, compared to underlying demand last year of around 200,000. This could result in a significant oversupply of dwellings and in turn could reverse the years of undersupply that has maintained very high house prices since the mid-last decade.”
Finally, Dr Oliver points to a shift in demographics and consumer work preferences as a reason house prices could fall.
“Prior to coronavirus, working from home was only slowly creeping in. Now coronavirus-driven lockdowns and social distancing has shown that it’s feasible for most white-collar workers and can be good for productivity,” Dr Oliver said.
While pointing out some of the benefits to working in an office, the economist noted that some sort of hybrid could become the new norm, which would push house prices down.
“Working from home works best in houses where there’s lots of room as opposed to apartments. All of which could revolutionise residential property demand – and from what I am hearing anecdotally, maybe already is,” he said.
“Which will mean less demand for property close to the CBD, greater demand for property in suburbs, with a decent community and environment and increased property demand in regional centres. All of which could break down the dominance of the city with its expensive property.
“This would turn the trend of recent decades favouring more condensed living close to the city on its head. Some office property (and possibly also some retail property impacted by the shift to online retailing) could be repurposed for residential use, thereby boosting housing supply. By fostering decentralisation, a shift away from cities to regional communities could dramatically improve housing affordability over time,” Dr Oliver concluded.
About the author

About the author


Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more

Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more

Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more

Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more

Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more

Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more

Property
Why home buyers are now more open to high-priced properties
Buyers are more likely to spend more to secure a property as their preferences shift towards bigger spaces with higher price tags, recent data has shown. ...Read more

Property
Government brushes aside RBA’s debt blowout warning
The government said it is not concerned about the RBA’s warning that the financial system could be rocked if there’s a debt blowout, in fact it is “very pleased” that confidence levels are lea...Read more

Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now

Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now

Raging floods, the tech stock bubble and the ongoing SG debate
Listen now

Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now

Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more

Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more

Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more

Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more

Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more

Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more

Property
Why home buyers are now more open to high-priced properties
Buyers are more likely to spend more to secure a property as their preferences shift towards bigger spaces with higher price tags, recent data has shown. ...Read more

Property
Government brushes aside RBA’s debt blowout warning
The government said it is not concerned about the RBA’s warning that the financial system could be rocked if there’s a debt blowout, in fact it is “very pleased” that confidence levels are lea...Read more