REA Group’s Economist Anne Flaherty warned that Australia’s housing crisis is “only going to get worse” as demand from strong immigration continues to far outrun housing construction.
“Over August we did see approvals increase by 7%. But compared to 12 months earlier they were actually down over 20%”, Flaherty told Sky News Business Editor Ross Greenwood.
“This is really problematic if you think about the fact that our population is growing so rapidly”.
“We know that over the 12 months to March, our population increased by 563,000 people. So, unless approvals pick up the issues, we’re seeing with undersupply at the moment are only going to get worse”.
“Unfortunately, building approvals are your best-case scenario of how many homes are going to be developed. Because the reality is that just because a property is approved for development does not mean it is going to get off the ground”.
“We know that over the past few years, there have been projects that have been approved that just have no longer been feasible because of the increase in development costs”.
“This particularly is an issue in the unit market where we’ve seen a much more rapid slowdown in building commencements. The cranes are starting to disappear and that’s a sure sign that the building effort taking place in those capital cities is really starting to come off”.
“There are a lot of lead indicators suggest that development activity is unlikely to really pick up meaningfully anytime soon”.
In an interview with The Australian’s James Kirby, economist Saul Eslake has also explained why rents will remain high for years:
“This year’s immigration intake of around 400,000 means a city the size of Newcastle has effectively arrived looking for accommodation within the nation’s existing housing stock”.
“It’s the key reason rental incomes are soaring and vacancy rates are close to 1%”.
“Moreover, there is very little to suggest the scenario of demand greatly outweighing supply will change over the next three years”.
“As a result, the rental vacancy rates of 2023 can be expected to extend for several years”.
None of this is rocket science. The Albanese Government has stupidly engineered the nation’s largest ever immigration boom at the same time as capacity across the housing construction industry is constrained amid high materials and financing costs, labour shortages, and widespread insolvencies.
The situation for Australian renters will, therefore, worsen given housing construction rates are falling at the same time as the population will continue expanding at a rapid pace:
The upshot is that Australian rents will continue to rise much faster than wages for the foreseeable future.
As a result, more Australians will be driven into financial hardship, into group housing, or into homelessness.
