BIS: Immigration collapse will decimate property market

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BIS Oxford managing director, Robert Mellor, believes that the collapse in immigration will decimate Australia’s property market:

“Whether it’s zero or close to zero the number has plummeted,” Mr Mellor said. “So we are forecasting a drop in migration of about 60,000 this financial year and another 150,000 next financial year.”

With about 2.7 people per household, the forecast drop equates to about 80,000 fewer houses needing to be built.

“These people who are no longer coming impact on the rental market, so it will significantly reduce demand and that will lift vacancy rates and increase risks around residential property,” Mr Mellor said…

ANZ head of economics David plank said lower population growth due to border closures reduced the demand for housing, while increased supply from conversions of holiday rentals to long-term rentals might increase supply.

“Together, these effects of the pandemic and lockdowns have already put downward pressure on capital city rents and are expected to reduce the return on investor housing,” Mr Plank said.

Exorbitant property prices in Sydney and Melbourne have prevented nearly an entire generation from owning a home, while consigning the rest to a lifetime of mortgage servitude and shoe-box living.

Therefore, removing mass immigration – a key demand driver – will significantly improve housing affordability (both prices and rents), in addition to consigning fewer people to live in tiny apartments.

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While lower immigration is terrible news for the property lobby, it should be celebrated by younger Australians who will finally be given a housing chance.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.