Nathan Birch says the cheapest parts of Australia’s housing market may be headed for a boom even as prices keep falling across much of the country. The 41-year-old investor said demand at the bottom end is being driven harder by migration than supply can keep up with, and that is already forcing buyers to pay more for scarce stock.
The timing matters because Australia posted its highest-ever intake of net permanent and long-term arrivals in January, with the figure surging past 57,000. Birch, founder of investment group B.Invested, said that flow of people is now colliding with a market where cheap homes are already attracting first-home buyers, investors and recent arrivals searching for an entry point.
“It’s supply and demand,” Birch said. “We have lots of people who want to buy property and not enough stock. We haven’t even seen the start of it.” He said he has been getting gazumped on deals worth $400,000 to $500,000, a sign that buyers are already paying up in suburbs where the entry price is still within reach for households shut out of pricier markets.
Birch said the pressure is strongest in the lower end of the market because recent arrivals, after gaining permanent residency, typically look first to cheaper outer suburbs. That puts them in the same arena as first-home buyers and investors squeezed by higher interest rates and tax changes, including restrictions on negative gearing. He estimated that 1.5 million new first-home buyers could eventually be unleashed as recent arrivals transition to permanent residency, adding another layer of demand to a segment that is already tight.
That is where the story becomes more than a simple migration play. Home prices are falling in most of Australia, but Birch said cheaper areas are still seeing stronger competition and price pressure, a split that has become more visible as India recently overtook the UK and China as the main source of migration. Projections suggest another 260,000 to 300,000 migrants could enter the country over the next year, and Birch said some buyers are already overpaying to secure homes in the cheapest suburbs.
He also tied the outlook to recent tax reforms, arguing that they could further sharpen demand at the bottom of the market. His read is blunt: if migration remains elevated and listings stay thin, the cheapest suburbs will not just resist the broader downturn — they could lead the next leg higher. The unanswered question is how far that split can widen before affordability, rather than supply, starts to set the ceiling.
