 Almost one million fewer people (than previously expected) are projected to be living in Australia by 2025, due to COVID-19 causing the largest negative shock to population growth since early last century. |  New demand for housing is expected to be 286,000 dwellings lower compared with the pre-COVID outlook between 2020 and 2025. |
 Despite the impacts of COVID-19, a recovery in construction activity from the COVID-19 recession is underway, led by detached housing, with total net additions expected to rise to 181,000 in 2021 from 170,000 in 2020 on the back of the monetary and fiscal stimulus put into place this year. |  Due to the demand shock, cumulative new supply is expected to be around 93,000 higher than new demand by the end of the projection period in 2025. |
 Weakness in net apartment additions will extend to 2025, where just 27,000 new dwellings are expected, similar to levels seen prior to the apartment boom. |  Sensitivity analysis shows that under slightly more optimistic population assumptions, cumulative projected excess supply over the projection period halves from around 93,000 to 46,000 dwellings, and this could be negligible if demand surprises on the upside. |
 With new supply expected to exceed new demand over the near term, the shock is likely to put downward pressure on rents in cities like Sydney and Melbourne where vacancy rates are higher, which could improve overall rental affordability for people whose employment conditions haven’t been adversely affected by the pandemic. |  Longer term trends of declining affordability, particularly for low-income households in the private rental market and prospective first home buyers are likely to persist, particularly if supply is not responsive to demand when it recovers. |
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