Top 25 Undersupplied Areas of 2025-With Junge Ma

Where is showing the strongest signs of supply shortage to set you up for massive potential for 2025? Together with Arjun and the rest of our data analyst team, we've come up with the top 25 undersupplied areas of 2025. You can get your hands on the whole list by clicking the link below. This episode, I'm going to personally walk you through five of the areas, unpacking population growth, number of listings change, building approval trends, current inventory levels, and vacancy rate. This episode is going to be a big one.

Let's get into it. Australia is going through a chronic housing supply crisis, and this housing supply crisis is making some of our cities the least affordable to live in. And InvestorKit team is monitoring the supply level of all SA3s across Australia. And every year, we publish a white paper called Australia's Housing Supply Crunch. And for this year, we are going to feature the top 25 undersupplied regions across Australia.

In measuring the housing supply level of each region, we have created a supply shortage score system, or SSS. In calculating the SSS of each region, we actually use six metrics. The first metric we use is people movement. So basically, the data point we use is population growth. The second metric is housing availability.

The data point we're using here is stock on market. Basically, it is the percentage, the number of the for sale listings takes in the whole house stock of a region. Third metric we're using is established supply level. So basically, that is the one year number of for sale listings change. Then the fourth metric we're using is future supply risk.

Basically, we measure the building approval rate of this area. The fifth metric is price pressure. The data point we're using is inventory level. So basically, the relationship between number of listings and number of sales. Then the last metric we're using is, of course, the rental market vacancy rate, measuring the supply and demand relationship in the rental market.

So based on the six metrics, we come up with a SSS for each of the SA3 regions in Australia. And in this white paper, we are, of course, featuring the top 25 regions with the highest SSS. And today in this episode, I'm going to walk through the top five of them. First region, Fremantle, the highest SSS 4. 8.

Fremantle is a SA3 in the Greater Perth region, 20 minutes from the Perth CBD. Its population increased by 14% over the past decade. But at the same time, the number of for sale listings in the house market declined by 29%. And in the past three years, because of the high construction cost and everything, the new house building approval rate actually decreased by 77%. So we are not seeing a lot of new house supply to come into the house market.

And currently, the inventory level in the sales market is just about 1. 2 months of stock, much lower than the three to four months of stock, the usually deemed balanced level. And it has been declining over the past year. And we are not seeing this declining trend to stop in the coming year. And in the rental market, vacancy rate stays at 0.

4%, an extremely low level. While we are seeing number of for lease listings increasing a bit, the vacancy rate is actually not increasing because rental demand is also increasing at the same time. And number two on our list, Joondalup, another SA3 in Greater Perth. And it is 30 minutes north of the Perth CBD. Population has grown by 4% over the past decade, not as impressive as Fremantle, but its for sale number of listings has declined more than Fremantle.

That is a 31% decline over a decade. And then in the past three years, the building approval rate declined by 62%, another big drop. And so we are not seeing a lot of new supply coming to the market. Inventory level now is even below one month of stock. It is around 0.

8, 0. 9 currently. There has been a slight increasing trend in the latest months, but we need more time to monitor it to see if this tick up is a permanent thing or a temporary thing. And in the rental market, we're seeing really tight supply as well, 0. 4% vacancy rate, just the same as in Fremantle.

Third area on our list, Mackay, a coastal city in North Queensland, a thousand kilometers north of Brisbane, the capital city. Mackay's population increased by 7% over the past decade. And at the same time, the number of for sale listings decreased by 40%. And in the past three years, building approval rate actually decreased by 50%, limiting a lot the new house supply in its market. Inventory level now is around 1.

5 months of stock. It has been declining steadily over the past two years. And in the rental market, vacancy rate again is very low as 0. 4%. Very similar to the greater Perth regions, we are seeing number of for lease listings increasing, but vacancy rate is just stable, meaning that our rental demand here is increasing as well.

Next region, Glaston, a port city in central Queensland, and it is 520 kilometers north of Brisbane. In the past decade, population here increased by 8%, but at the same time, the number of for sale listings decreased by 31%. And then building approval rate, very similar to Mackay, halved over the past three years. And in the sales market, inventory has declined to about 1. 4 months of stock, been decreasing steadily ever since the beginning of 2024.

And entering 2025, we are expecting this declining trend to continue. And in the rental market, vacancy rate is at 0. 9%, not as low as Mackay, but it has been declining since 2020. And now we are still seeing a downward trend in the vacancy rate. The fifth and last region, we are looking at Bunbury.

So we're back to Western Australia. It is a regional coastal city, 170 kilometers south of Perth. Over the past decade, population has been increasing steadily, 12% growth in 10 years. But at the same time, the number for sale listings decreased by 28%. And then in over the past three years, new house building approvals decreased by 40%, not contributing much to the increase in housing supply in Bunbury.

In the sales market, inventory level now is around 1. 5 months of stock, similar to the greater Perth regions. We're seeing this slight tick up at the end of 2024, but we'll need more time to monitor this trend to figure out if this tick up is just an end of year thing or its supply level is actually going up. In the rental markets, we are seeing, again, a very tight supply. Vacancy rate now is 0.

4%, and it has been like this for more than a year. So that was five of the top 25 undersupplied regions in 2025. Their supply shortage has facilitated strong growth in these regions in 2024, and moving into 2025, we expect the supply shortage continue to boost the house price growth. If you're interested in the full list of the 25 most undersupplied regions, make sure to click the link below to download a copy of this white paper. I'm Junge Ma, the lead research analyst at InvestorKit.

Thank you for your time, and I'll see you next week.