A drop in the demand for housing in Melbourne thanks to the coronavirus pandemic could lead to an increase in vacancies and a drop in rental costs.

The pandemic is projected to cut the demand for new homes across the country by just under 270,000, before recovering in 2023.

In projections from the National Housing Finance and Investment Corporation, Victorians are told to expect lower rents, at least in some high-demand areas.

Slow population growth thanks to closed international borders is expected to outstrip other initiatives to boost the property market.

Low interest rates and government programs have so far helped keep prices relatively stable across the country.

In Melbourne, it is estimated that there will be an over-supply of 75,500 dwellings before 2022 when demand begins to catch up with supply.

The prediction is good news for those looking to rent over that time, who are most likely to see the knock-on effects in the rental asking price.

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However, once the international borders reopen, we’re told to expect the pressure on rents to start returning.

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