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Which capital city is currently sitting at the highest risk of not having enough housing supply and not building fast enough to keep up with the population boom? Not all capital cities are created equal, which is why it's so important for you as a property investor to understand, because the dollars are made in details. So let's start talking about the details. Which capital cities are said to have the lowest housing supply and the highest population growth, potentially fueling even more price pressure? I'm Junge Ma, Senior Research Analyst at InvestorKit.
Now let's get into it. Australia's population is booming at the same time we're not building enough. In this episode, I'm doing two separate rankings, one for the current supply level across all eight capital cities, and the other for the incoming supply level in the coming two years by the end of 2027, and see which cities are seeing the tightest supply now and which cities are seeing the tightest supply in the near future. And then in the end, we will combine the results of the two results and get a ranking of capital cities of overall supply crunch levels. So for established supply level, we would love to compare the number of for sale listings of all types of dwellings, including houses, townhouses, apartments, etc.
, relative to the capital city's current population level. And the metric we're using to rank the cities would be per capita for sale listings. At this moment, Melbourne has the largest number of for sale listings, while Sydney has the largest number of population. But will they top our list? Let's have a look at the actual numbers.
Sydney has 4. 8 listings per 1,000 people. Melbourne, 6. 5 listings per 1,000 people. That's significantly higher than Sydney.
Brisbane, just 4. 2 listings per 1,000 people. And Adelaide, slightly higher, 4. 7 listings. Perth, a bit more, 4.
9 listings. Darwin, 4. 6. Hobart, really high, at 10. 1 listings per 1,000 people.
And then Canberra, as market pressure is not back to a high level yet, is still seeing a high number of 8. 5 listings per 1,000 people. So overall, Queensland is seeing the lowest per capita listing number, followed by Darwin, then Adelaide, Sydney, Perth, Melbourne, Canberra, and then Hobart. That's the ranking of the established housing supply crunch level. And now, will it change in the coming two years as population continues to grow and new housing building speed becomes different among cities?
For incoming supply level, we would compare population growth forecast with building approval rate over the past three years. I'm using three years because we're considering both houses and units. For houses, 15 months would be enough because average construction time for a house would be around a year. But if we consider townhouses or apartments, the time from building approval to completion would be much longer. And three years would be the average period.
For population growth forecast, we're using the data from Australia's Center for Population. So in the coming two years, population growth in Sydney is expected to be 2. 45%. Melbourne, higher at 3. 28%.
Brisbane, 3. 3%, similar to Melbourne's. Adelaide, 1. 8%. So it's gonna coming down a bit.
Perth, continuing to perform the best, 3. 8%. And then Hobart will continue to be lower at 0. 2% for two years. And then Darwin is not doing bad, 3.
09% in two years. And Canberra, 2. 52% in two years. And then how about how fast houses are building to meet the extra housing demand? I'm gonna start from the fastest building capital cities.
Melbourne, the three-year total building approval rate would be 6. 5%. New dwelling units will be taking around 6. 5% of the current housing stock. After that, we have Brisbane at 6.
15%. Then Canberra, 5. 8%. Perth, 5. 6%.
And the lowest would be Hobart, just 2%. It makes sense because its population growth is really slow. Now to compare these two series of numbers, we simply divide one by another and get a metric of how many times building approval rate is of population growth rate. The numbers will be listed on the screen and I'll be shouting out the highest and the lowest numbers. Highest, as you might have guessed, is Hobart.
New housing supply is almost 10 times of its population growth rate. And the lowest is in Darwin. New housing supply is just 0. 9 times of population growth. So incoming supply will be constrained.
So for incoming supply, Darwin is topping our leaderboard, followed by Perth, a moderate level of incoming supply and a high level of population growth. And then Brisbane, similar to Perth. And after that, we have Sydney and Melbourne. In the end, we have Adelaide, Canberra, and Hobart. Putting these two rankings together, the orders are not really very different.
For example, Darwin is at the top on both of the two leaderboards, while Hobart is at the bottom of both. If we just simply average these two, we'll get the final ranking of overall supply crunch level. At the top, we have Darwin, and then Brisbane, Perth, Sydney is at the fourth place, Adelaide, following Sydney, Melbourne is even below Adelaide, considering how many new houses they're building. And then at the end, we have Canberra and Hobart. What I want to say about this leaderboard is that the ranking here is not fixed.
Over time, as Canberra and Hobart continues to recover in terms of economic strength and population growth, the extra supply will be gradually absorbed by new demand. In a few years, we might see a totally different order if we are going to do this exercise again. One of the important things to remember is that we're only talking about a few years in the future here. These numbers will continue to evolve and change. And it's something you should always be considering as a property investor in the future.
As of right now, Darwin looks to be the most undersupplied. But like I said, this is going to evolve over years. I'd love to hear your thoughts about this one. So pop your comments below. I'm Junge Ma, Senior Research Analyst at InvestorKit.
I'll see you next time.
