Red-hot growth in population is underpinning massive housing demand in Victoria even as fears of oversupply in some areas of the Melbourne residential market intensify.

The latest ABS figures show that Victoria welcomed a record of 127,500 people (net) over the year to September 2016 as the state’s population increased by 2.1 per cent – far more than that of any other state. Overseas migration was the biggest contributor, as a whopping 68,613 (net) new…