Dear milesg, as you indicated the reduction in demand is not new and was primarily due to NSW which has been going down for some 2 years ever since NSW economy and construction indusrty became a basket case. the rest of the country was actually moving along quite well.
In fact the last lot of stats indicated NSW actually had a small increase. the big reduction recently has been multi unit which have fallen significantly in wake of the GFC due to finnancing issues. not unexpected as financiers are not willing to fund speculative developments.
the demand has also fallen off as people loose confidence in the market. as the population is still growing and family units are being established, or delayed due to the GFC, the demand is being pent up.
Not sure that 1% rental supply is good, rather indicates that it is very very tight. not sure where the supply is apart from the 'vacant houses' commentary promoted by bubblepedia which was just a ABS stat of the number of persons not home on census night.
As housing confidence dropped persons such as couples who would have bought have due to rents increased now started to share with other couples, staying at home, and this generation x thing of 30 year old still living at home is a prime example. One to maintain their lifestyle ie no commitments and actually somewhere to live.
however, once confidence returns people fed up with renting, at the mercy of their landlords whims will start to buy.
