Aussie Renters Crushed by Population Growth from Mass Immigration, By James Reed

Two new articles have appeared at Macrobusiness.com.au, which is the leading site critiquing the present mass immigration program and its disastrous effects upon accommodation, indeed, producing the worse accommodation crisis in Australia's history. The average rental price is a mind-blowing $ 600 per week, with over the past year to June 2024, rentals increasing on average by $ 50 per week. Rentals in the capital cities are higher at on average $ 640 per week. It is simply the remorseless logic of supply and demand. Rental listings fell by 4.4 percent. And it is likely to get worse as predicted by PropTrack:

"Consequently, it is difficult to imagine rental prices stabilising. The primary driver of slower rental growth is likely to be the capacity for renters to afford rising rent prices".

"From here, we expect rents will continue to climb, particularly in the major capital cities. This is due to persistent low supply and strong demand being exacerbated by rapid population growth. While population growth is forecast to slow, it will remain elevated this financial year and next".

"As was the case in 2023, we expect that the rate of rental growth will slow in 2024 as the higher cost of rent and the overall rise in cost of living will limit rental increases. Renters will be increasingly looking for smaller and cheaper properties or forced into share house living to save on rental costs."

Oxford Economics predicts that 960,000 new homes will be built in Australia over the next five years. The Albo government's target to house all of their, as I see it, replacement migrants, is 1.2 million homes, so once more there is a dramatic short fall, well short of the Albanese government's target of 1.2 million homes. Of course, mass immigration continues unabated, so more petrol will be added to the accommodation bushfire. One article concludes:

"However, the 2023 Intergenerational Report projected that net overseas migration will run at 235,000 annually into eternity, swelling the nation's population to 40.5 million in just 39 years—equivalent to adding another Sydney, Melbourne, and Brisbane to the current population of 27 million:

As a result, Australia's housing shortage will become permanent."

Stopping mass immigration must be the number one priority of those seeking to see Australia have any sort of longer-term future.

https://www.macrobusiness.com.au/2024/07/rapid-population-growth-steamrolls-aussie-renters/

"PropTrack has released its rental market report for the June quarter, which showed persistently strong demand for rentals amid limited supply.

National advertised rents were unchanged over the June 2024 quarter, remaining at $600 per week:

Over the 12 months to June 2024, national advertised rents increased by 9.1%, or an additional $50 per week. This price growth is steady from the previous quarter but well down from the 13.4% increase over the 12 months to June 2023.

The typical capital city advertised rent ($640 per week) is $100 more expensive than the typical regional rent ($540 per week), and rents in the capital cities have grown at a faster pace over the past year compared to regional markets with increases of 10.3% and 8% respectively.

Both capital cities and regional markets have seen annual rental growth slow compared to a year ago with the slowing more pronounced in the capital cities.

Tenants remain starved of choice, with total rental listings in June down 4.4% from June 2023, with the fewest total rental listings for the month of June since 2010:

The combined capital cities have seen a 1.7% reduction in total rental listings over the year to June 2024, sitting 24.2% lower than the June average over the decade to 2022.

Regional markets have seen a larger annual decline in total rental listings of 12.5% and relative to the decade average, total listings are 35.8% lower.

The national rental vacancy rate was recorded at 1.4% in June 2024, up from 1.1% in the previous quarter and unchanged compared to June 2023.

This compares to a national rental vacancy rate of around 2.5% prior to the pandemic.

Despite the modest improvement across a range of measures, PropTrack warns that renters will remain under chronic pressure amid "rapid population growth" and a shortage of supply.

"Fundamentally, supply remains far too low and demand far too high, but with the cost of living surging the capacity to pay rents is reducing".

"In response to higher rents, people will look to reduce the size of their rental properties, move to a less desirable location in which rents are cheaper or share their rental properties with others to reduce the cost"…

"With limited new rental supply and persistent strong demand for rentals, the vacancy rate is anticipated to remain low. This highlights again how a significant lift in rental stock or reduction in rental demand is required to see more stable rental conditions similar to pre-pandemic"…

"Although rental growth is expected to slow, it is anticipated to continue to outpace the rate of inflation. The imbalance between demand and supply persists, exacerbated by limited new housing construction, many investors selling, and a low volume of investors purchasing".

"Consequently, it is difficult to imagine rental prices stabilising. The primary driver of slower rental growth is likely to be the capacity for renters to afford rising rent prices".

In short, with population growth likely to exceed construction for the foreseeable future, the outlook remains grim for Australian tenants.

That said, unlike mortgages, rents cannot be leveraged. This means that rental growth is more closely tied to household incomes, limiting its potential increase.

https://www.macrobusiness.com.au/2024/07/no-end-in-sight-to-housing-crisis/

"A report from Oxford Economics forecasts that 960,000 new homes will be built across Australia over the next five years, well short of the Albanese government's target of 1.2 million homes.

The construction shortfall will mean that the housing crisis will deepen and remain a "chronic" issue.

The report's author, Timothy Herbert, says that dwelling construction will reach record levels by the end of this decade, although it will not be sufficient to meet the demand for housing.

"While industry capacity is showing signs of improvement in areas, labour shortages remain that will place a speed limit on the early to mid stage of the recovery", he said.

"While we will continue to experience a dwelling stock deficiency, activity will inevitably recover in the residential sector. All build forms will contribute, driving total dwelling commencements to a new record level by the end of the decade".

Hilariously, the government's own National Housing Supply and Affordability Council has also ridiculed Labor's 1.2 million housing target, forecasting that the private market will only supply 903,000 new homes by 2029.

Let's get real for a minute. Australia's record level of housing construction over a 12-month period was 223,600 in 2017. This was 7% below Labor's target level of 240,000 homes.

Housing construction rates tend to be negatively correlated with interest rates.

Back in 2017, when Australia achieved its record housing construction, the official cash rate was only 1.5%, compared with 4.35% currently:

Moreover, construction costs are at least 40% higher today than they were in 2017:

The residential construction sector is also experiencing massive insolvencies, with nearly 3,000 construction firms going under in 2023-24:

The residential building industry is also competing for scarce labour and materials with 'big build' government infrastructure projects:

The reality of the situation is that the structural undersupply of housing will continue so long as the federal government continues to grow the population faster via immigration than homes and infrastructure can be constructed:

Therefore, the only realistic solution to easing Australia's housing shortage is to cut net overseas migration to a level that is below the nation's capacity to supply housing and infrastructure.

However, the 2023 Intergenerational Report projected that net overseas migration will run at 235,000 annually into eternity, swelling the nation's population to 40.5 million in just 39 years—equivalent to adding another Sydney, Melbourne, and Brisbane to the current population of 27 million:

As a result, Australia's housing shortage will become permanent.