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Australia’s most powerful banker has linked record population growth from immigration with higher rents and rising house prices.
Reserve Bank of Australia Governor Philip Lowe suggested the housing supply crisis was only likely to get worse with construction failing to keep pace with demand.
This financial year, a record 400,000 new migrants are moving to Australia with the 1.7 per cent population growth pace among the highest in the developed world.
‘The other thing that’s now happening is a big increase in population,’ Dr Lowe told the Senate economics committee on Wednesday.
‘The population’s increasing by two per cent this year.
‘Are there two per cent more houses? No. The rate of addition to the housing stock is very low.
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Reserve Bank of Australia Governor Philip Lowe suggested the housing supply crisis was only likely to get worse with construction failing to keep pace with demand
‘We’ve got a lot of people coming into the country, people wanting to live alone, it doesn’t work.
‘The way that this ends up fixing itself, unfortunately, is through higher housing prices and higher rents.’
An ANZ-CoreLogic report released this week showed renters across Australia were spending 30.8 per cent of their income paying a lease, the highest level since June 2014.
This is coinciding with a slump in building approvals with the 8.1 per cent drop in April taking it to the lowest level since 2012, the Australian Bureau of Statistics revealed on Tuesday.
Dr Lowe suggested more younger Australians would continue living at home with their parents.
As rents go up, people decide not to move out of home,’ he said.
An ANZ-CoreLogic report released this week showed renters across Australia were spending 30.8 per cent of their income paying a lease, the highest level since June 2014 (pictured is a rental inspection queue in Sydney)
The national rental vacancy rate of 1.1 per cent at record lows, after more people chose to live alone during the pandemic only for immigration to surge as Australia was reopened again to skilled migrants and international students.
‘The underlying issue here is supply and demand in the rental market,’ Dr Lowe said.
‘The vacancy rates in many cities are very low, the rental vacancy rate is the lowest it’s ever been.
‘During the pandemic, the average number of people living in each household declined.
‘People wanted more space, they were working from home.’
Migrants sick of expensive rent, who are on higher salaries, would be more likely to buy their own home to live in.
Sydney’s median house price in April increased by 1.3 per cent to an even more unaffordable $1.254millon, CoreLogic data showed, despite the Reserve Bank increasing interest rates 11 times during the past year.
House prices also increased in Melbourne, Brisbane Adelaide, Perth and Hobart.
While tighter monetary policy has reduced real estate values during the past year, prices have historically bounced back once the rate rises have stopped.
The Treasury Budget papers forecast a record 400,000 migrants arriving in 2022-23, on a net basis, followed by another 315,000 in 2023-24.
Source: | This article originally belongs to Dailymail.co.uk
