12 Dec 2022

New research from Urbis in collaboration with PEXA, details how the demand for property in Australia’s three largest capital city markets has evolved as a result of COVID-19.

The exploratory report analyses the transactions and rental listings across the inner, middle and outer areas of Melbourne, Sydney and Brisbane using data from before, during and after the pandemic.

Looking at the impact for both buyers and renters, the report explores how resilient our cities have been over this period while unpacking the trends and dynamics at play.

The pandemic turned our housing markets inside-out. The more time locked inside, the more people moved out. Now, our markets are turning outside-in as those drivers have been reversed – and tenants are rushing back to inner areas.
With a comprehensive picture of how our housing markets are working, we must find the missing middle ground.

Mark Dawson View Profile

Despite a clear trend of consumers migrating to outer suburbia at the onset of the pandemic – seeking more space and embracing new working from home arrangements – this trend has recently reversed, as hybrid working takes hold and more Australian workers head back into the office. Throughout the research, two major findings emerged:

New housing supply was not evenly distributed across regions in our major cities.

Our three largest cities exhibited a distinctive ‘reverse donut’ growth pattern, with new dwelling supply concentrated in the inner and outer rings, but far less growth in the ‘middle ring’ suburbs.

In our middle suburbs, new housing was relatively supply-constrained, with demand tending to outstrip supply over an extended period. A consequence of this imbalance is rising unaffordability, as more buyers compete for limited properties in the middle ring, putting upwards pressures on prices which then permeates throughout the entire city. This problem of the ‘missing middle’ is likely to continue, unless new housing supply can be unlocked in order to meet demand from suburban buyers and renters.

Local house prices might be falling, but their maximum loan size is becoming progressively smaller as interest rates increase. Fewer people are moving from renters to first-home owners, and at lower average price points, placing further pressure on rental markets.

Mike Gill, Head of Research, Pexa

As property prices grew during the pandemic the proportion of more affordable homes in all three major urban centres declined.

On the flipside, rental prices experienced declines in the early stages of the pandemic as borders closed and governments introduced protections for tenants, causing a boost in rental listings.

However, these declines have been reversed in 2022 with rental listing volumes dropping considerably putting upward pressure on asking rents and moving back to pre-pandemic levels.

Now that we can see through the transitory trends of the pandemic, it is time to look forward at the serious business of addressing structural housing supply. We note from the research, that:

  • More rental housing is needed to fill the fast-approaching void in available listings. As we know, rents climb when listings fall.
  • More ways of accessing housing is necessary, whether to rent, buy or anything between. Although prices have been contained, borrowing is becoming less affordable.
  • More supply needs unlocking – while the middle rings of our cities are home to many, housing supply is insufficient, and so are the pathways to more homes offered by infrastructure projects which are releasing land otherwise locked up by planning and pricing.

Against this backdrop, the shake up in demand trends, housing costs, politics, and economics we are seeing across our cities gives us much needed impetus to take a fresh look at our National Housing Plan.


Residential property transactions in the middle and outer rings of Melbourne grew strongly during the pandemic as buyers searched for larger properties better suited to spending more time at home. At the same time, the inner ring of Melbourne suffered a significant drop in transactions from which it is only just starting to recover.

In the Melbourne rental market, the inner ring of Melbourne saw the greatest spike in listings and subsequent fall in rents over the pandemic. The rebound has now gathered pace rapidly, with listings trending at half the volume of January 2021. Rents in the outer and middle rings of Melbourne have continued to grow throughout this period, so much so that rents in the outer area have been playing catch up to rents in the middle ring.


The outer ring of Sydney experienced a large increase in transactions in FY21 as buyers looked to escape the city during the early phase of the COVID-19 pandemic. This growth stalled in FY22 as restrictions were lifted and the inner and middle rings of Sydney proved more popular with buyers in FY22. Sydney experienced a shorter and shallower impact on rent compared to Melbourne. These impacts occurred in the inner and middle rings of Sydney, and had largely recovered by the end of 2021.

Rental growth has since accelerated further beyond pre-pandemic levels. Landlords in the outer ring of Sydney avoided negative impacts on rents during the peak pandemic impact in 2020, with rents continuing to climb into 2022. Listing volume has fallen substantially across Sydney adding the prospect of further rental price growth.


All regions experienced explosive growth in residential transactions in FY21, as Queensland was able to control the spread of COVID-19 and benefited from increased interstate migration. The middle ring of Brisbane was up a huge 80.3% year-on-year as the market boomed. This growth slowed in FY22 as the market softened, with the inner ring of Brisbane becoming more popular with buyers.

In contrast to Sydney and Melbourne, Brisbane did not experience the same prolonged spike in rental listings associated with COVID-19 lockdowns. As a result, rental impact was limited in extent and duration in 2020 and rents have since accelerated across the inner, middle and outer rings of Brisbane in line with declining listing volume.

City comparison: residential dwellings (click to enlarge)

City comparison: Residential sale settlements (click to enlarge)

City comparison: rental (click to enlarge)

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Mark Dawson View Profile
Alistair Towers View Profile
Dylan Gray View Profile
Kristen Saul View Profile
Princess Ventura View Profile
Alex Stuart View Profile
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