Australia’s rental market is in crisis following the collapse in vacancy rates to a record low 0.9% across the combined capital cities:
Source: CoreLogic
The acute shortage has driven advertised rents up by around 30% since the start of the pandemic, causing severe financial pain for lower-income Australians:
SQM Research managing director, Louis Christopher, believes the situation will get worse in 2024 for the simple fact that net overseas migration has soared to record levels at the same time as dwelling construction is collapsing.
Christopher has forecast 7% to 10% growth in average capital city rents in 2024, led by the four largest capital cities:
Commenting on the forecast, Louis Christopher pulls no punches and puts the blame squarely on the Albanese government’s extreme immigration policy.
Christopher also forecasts that dwelling completions will slow further in 2024 to just 153,000 (versus around 175,000 this year), against expected population growth of 455,000 (versus around 575,000 in calendar year 2023), creating an additional shortage of 20,000 homes.
“Coming towards the end of 2023, the rental markets remain in severe, critical shortage. Given what we know is in the pipeline for dwellings under construction, Australia is looking set to build less in 2024 than what was built for 2023 (an estimate of 175,000 dwellings)”, Christopher notes.
“I hope I am right about our forecast slowdown in migration rates, for if we have another year like 2023, we are going to have a very sharp rise in homelessness and the community anger on housing will be immeasurable”.
“In such a situation , I believe it would be a change of Government event”.
“As it is, the supply/demand imbalance is here to stay for another year which will likely mean further market rental increases of 7 to 10%”, Christopher warns.
Louis Christopher’s population forecast of 575,000 people in 2023 and 455,000 in 2024 look a little low to me, given the ABS national accounts estimated that the population grew by 626,000 in 2022-23 and net overseas migration looked to have increased further in the September quarter.
Nevertheless, his overall point remains: Australia is facing a deepening housing crisis and another year of strong rental inflation.
This will push more Australians into share housing or homelessness, and will place upward pressure on inflation and interest rates.
The only solution is for the Albanese government to cut immigration to a level below the nation’s ability to build new homes and infrastructure.
Otherwise, the housing crisis, living standards and productivity will deteriorate further.
