According to an analysis recently released by BIS Shrapnel, every state except New South Wales is set to go into oversupply within two years.
Among all the states, Queensland is predicted to have the worst figures with an oversupply of 26,400 dwellings by June 2018.
“This is really an unsustainable cycle driven by overbuilding of high density apartments,” said Robert Mellor, managing director of BIS Shrapnel, referring to the record dwelling construction figures coupled with a substantial decline in underlying demand.
“There is going to be a substantial correction, probably not just over the next 18 months, but the next two to three years.”
Melbourne and Brisbane are already starting to show a downturn in investor demand.
BIS Shrapnel is forecasting a decline of -10.6% in national residential building this year, with dwelling commencements falling to 205,150. A further -16.1% fall is expected for the 2017/2018 financial year despite the possibility of further rate cuts.