Housing bottlenecks drive massive inflationary shock

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Deloitte’s weekly economics briefing notes that the housing market is becoming a key driver of Australia’s inflationary pressures:

Housing was one of the key contributors to the latest CPI reading (alongside transport and household goods), growing 9.0% through the year to June. A key driver behind the growth was the jump in new dwelling prices, growing by a super-sized 20.3%. In this context, the cost of building has been pushed up by shortages of building supplies and labour, as well as elevated freight costs.

In comparison, the rent component of the CPI has remained muted, growing only 1.6% through the year across the country. That said, there are early signs that rents are starting to lift, with Sydney and Melbourne recording rent price rises in two consecutive quarters…

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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.