Westpac has forecast that Australian rents will continue to hyper inflate until mid-2024 because of soaring international migration.
Westpac Business and St George senior economist Pat Bustamante warned the current rental inflation was likely to be longer and more severe than the prior cycles because demand via immigration was vastly outpacing supply.
“Given the current supply and demand dynamics, and the lag in supply, the peak would likely take longer than people expect”, Bustamante told The AFR.
“The return of migrants and international students… [is] putting a further strain on the rental market”.
Westpac estimates that around 70% of migrants rent when they arrive in Australia. Therefore, as record immigration flows arrive in 2023, rents will also rise at a record pace.
“Already, we have seen advertised rents growing at over 10 per cent annually and we are only at the beginning of the rental shock”, Bustamante said.
Accordingly, Westpac forecasts advertised rents to soar by 11.5%, which would be the sharpest annual increase on record.
CoreLogic head of research Eliza Owen agreed saying the 1.3 million returning overseas arrivals in 2022 have exacerbated the rental shortage.
“Long-term overseas migrants largely rent when they first come to Australia, adding to demand and short-term visitor arrivals will also require accommodation”, Owen said.
As I explained last week, the entire housing (rental) shortage has been manufactured by the federal government via its mass immigration ‘Big Australia’ policy.
The Intergenerational Report projected that Australia’s population will grow by 13.1 million people (50%) in only 40 years on the back of extreme net overseas migration of 235,000 a year.
That population increase is the equivalent of adding a combined Sydney, Melbourne and Brisbane to Australia’s current population in only 40 years.
As long as the federal government continues to run immigration at such extreme levels, demand will forever exceed supply and Australia will forever suffer from housing (rental) shortages.
Ultimately, high population growth (immigration) is a direct policy choice, and one that most Australians do not support.
If policy makers genuinely want to solve Australia’s housing crisis, they must start by moderating population growth (immigration) so that demand better matches supply.
Otherwise, the rental crisis will become a permanent feature of Australia.
