Australia's property prices have looked bubbly for a while, but the surge is likely to hit a wall soon amid a combination of few births, high mortality and sparse migration, Goldman Sachs said.
"We estimate Australia's population will likely be 260,000 smaller by the end of 2015, 410,000 smaller by the end of 2016 and 530,000 smaller by the end of 2017," Goldman said in a note Wednesday. "We change our estimate of demographic demand for housing from a 140,000 underlying deficit for established homes by the end of 2017 into a 75,000 underlying surplus."
That's a sharp turnaround from a strong run-up. House prices down under appreciated 23 percent over the past two-and-a-half years and are forecast to increase by 8 percent this year, driven in part by Chinese buyers seeking investment properties, HSBC estimated in February.
While the country's population growth over the past decade had been among the most rapid in developed markets, that's changing, Goldman said.
Slowing income growth and women delaying having children have caused the birth rate to fall 3 percent on-year currently after a spike from 2005-2008, Goldman noted.