"Its the supply overhang we're worried about," he said. "Apartments are smaller, there's a lot more of them, and vacancy rates are already starting to rise in some areas, when we haven't even seen the most of the approved stock built yet."

Goldman Sachs economist Tim Toohey estimates Australia will have 530,000 fewer people in 2017 than is estimated by the ABS, resulting in a surplus of around 75,000 homes.

The birth rate is at historic lows, the death rate is at historic highs and net migration is falling away, Mr Toohey argues, so population growth is more likely fall around 1.25 per cent a year for the next three years, compared to the ABS estimates of 1.7 to 1.8 per cent a year.

Mr Joiner believes population growth is likely to average around 1.5 per cent a year for the next three years driven by softer inbound migration levels, particularly from New Zealand.


"And if you're dropping your estimates to 1.25 per cent, that means migration is going to be half of what it is now, and I can't see that happening at all."

Net migration is driven in the longer run by Government programs, and Mr McDonald is doubtful the migrant intake would be cut in half. But he agrees that inner city apartments are the segment to be most affected in the event of sustained falls in migration numbers.

Demand in the centre of the city is driven by temporary migrants such as those on working holidays, international students and overseas professionals, whereas freestanding homes on more land further out of the city are more likely to be purchased by local residents.

"There's a pattern where as children have grown up, they've tended to move a little bit further out than their parents, and that preference is still there driving demand on the fringe," he said.

But new migration policies will kick into gear before population growth slows below the ABS forecasts, he said.

Australia is also about to see the effect of a new migration policy allowing international students at Australian universities to remain in the country for two to four years after graduation.

"It will have a sizeable impact on population, and that affects a particular segment of the housing market," he said, referring to inner city apartments.