Demand in Victoria set to outnumber supply

By Sasha Karen 22 August 2017 | 1 minute read

New data reveals demand for housing in Victoria is high, but in the not-too-distant future new supply won’t be able to meet that demand.


Released by the Urban Development Institute of Australia (UDIA), the residential development index (RDI) for Victoria reveals the state is at an index of 112, with extremely high levels of new housing activity, but these levels are not going to be met with adequate new supply.

The UDIA’s forecast shows that in Victoria, if current trends continue, demand will outnumber supply by over 4,000 dwellings, which would cause a surge in dwelling values.

“The supply of new housing being delivered right now is being driven by high population and employment growth, said Danni Addison, Victorian CEO of the UDIA.

“This growth is positive and has supported strong levels of activity from the sector as it delivers new housing which has progressed through the planning, approval and funding pipeline in recent years.


“However, the forward pipeline for the years to come tells a very different story, and the RDI points to a serious housing undersupply. This is cause for major concern both from an affordability, liveability and economic perspective as Victoria’s population only looks increase on recent projections.”

Ms Addison added upcoming challenges the residential development industry in Victoria will face include “an unclear future urban renewal pipeline, a series of recent policy changes such as increased taxes on foreign purchasers and the removal of incentives for investors, as well as production capacity challenges for new housing in Melbourne’s growth corridors”.

“These issues will undermine the affordability and supply of new housing across all market segments if they are not urgently addressed,” she said.

The RDI looks at purchasing power, supply and demand of new houses to determine its index, as well as take into consideration any other factors, such as the current economic conditions, changes made by the government or regulatory bodies and population trends.

The UDIA states an RDI above 102 shows a market at least at a medium level.


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Demand in Victoria set to outnumber supply
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