This research assessed the impact of the COVID-19 pandemic on patterns of housing supply and demand and how the Australian housing market has changed over recent time (including between the 2016 and 2021 Censuses).
The pandemic showed just how quickly demand for housing can change and how prices and rents can rise rapidly as a result. The COVID-19 period, defined as mid-2020 to mid-2022 for the purposes of this study, saw robust price growth within Australian capital cities and even stronger growth in regional areas. In the rental market, vacancy rates fell across the country and rents rose sharply.
COVID changed what households want from their dwelling: predominantly it was about having more space, both inside and out, and that was linked with the ability to work more from home. Overall, consumers continue to prefer houses over units in metropolitan areas.
COVID-19 also created significant and distinct changes to population dynamics with low or negative growth within inner urban areas; growth in regional towns and cities, particularly those associated with sea and tree changes; and strong growth in traditional first home buyer areas, primarily on the urban periphery.
Property sales in high-growth regions came significantly from investors who sold stock from the rental market (generally to first home buyers and second home buyers). This, in turn, reduced rental availability and vacancy rates and displaced private renters. Where investors did buy into the regional areas studied, these were at higher prices which were in turn reflected in higher rents.
The research reiterates that increases in housing supply need to be carefully managed by governments, including the supply of social and affordable housing in regional areas.