Housing Price Push in Australia’s Capital Cities due to Population Increase

Monday, August 19, 2013

Recent analysis by social researcher and demographer Mark McCrindle shows that over the past 5 years, there has been a significant housing shortage in Sydney, with a shortfall of 97,238 people (42,277 homes). The shortfall over the last several years has considerably waned when compared to 2008/2009 figures, but remains evidently visible.

The shortfall calculated in these figures is in fact likely to be even greater than the numbers represent. The following numbers are based on housing approvals, not constructions, and do not account for the growth of household demands coming from children leaving the parental home, the ageing population desiring smaller household sizes, and the growth of the couple-only household. These figures are therefore based solely on population growth figures, omitting the changing household data.

Housing undersupply in Sydney: Demographic growth and demand exceeding housing construction and supply


Housing approvals[1]

Population accounted for[2]

Population increase[3]

Shortfall (people)[4]
























68,142 (iv)







[1] Data from UDIA based on Grater Sydney. NB: Housing approvals are close to but less than housing construction and so the actual housing shortfall is likely larger than the one expressed here.

[2] More new homes in greater Sydney are medium-high density than detached homes. Nationally household size is 2.6 but for medium-high density it is around 1.9 therefore we have taken a household size of 2.3 for this forecast and so 110,000 new homes would meet the needs of 253,000 people.

[3] ABS demographic data, Greater Sydney population change. This population growth forecast is based on the average Sydney growth over the past 5 years (1.46%).

[4] The population growth minus the population accounted for.

Housing Prices Not Just Irrational Exuberance

This data shows that the rising property prices in our capital cities such as Sydney are driven by demographic demand that is greater than housing supply, as opposed to any “irrational exuberance.” Four decades ago the average house in Sydney was the equivalent of five times average earnings, by 1993 it had risen to six times annual earnings while today it is ten times average annual earnings!

For further demographic analysis and the latest insights, visit our Resources Page.

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