Economist Warren Hogan has warned the decline in housing approvals alongside the flood of migrants will have a “brutal” impact on the rental markets in Sydney and Melbourne, and will see an increase in homelessness.
“If it is not in a crisis yet, this surge of migration will absolutely push the rental market in Sydney and Melbourne into a crisis”, Hogan said.
“We know that about one-third of Australians rent, and we can assume that a much bigger proportion of new migrants will be renting as well”.
“Rent rises are coming, and they are going to be brutal – I have no doubt we will see an increase in homelessness and more people moving in with friends and family to cope with this”.
“I don‘t see anything in the immediate future that is going to change that. Approvals have been going down, not up”.
The warning follows the Urban Development Institute of Australia’s (UDIA) latest State of the Land report, which shows a dramatic slump in new home sales:
Due to rising interest rates, burgeoning construction activity, and concerns about builder failures, buyer demand fell dramatically over the course of the 2022 calendar year, with greenfield lot sales nearly halving and settled apartment sales falling to their lowest level since the global financial crisis.
The UDIA predicts that dwelling completions will “retract sharply” and fall about 50,000 below the 200,000 dwellings needed annually to meet the federal government’s plan to build 1 million homes over five years starting in 2024.
“The UDIA’s latest report serves as the ‘canary in the coalmine’ for governments to act now to bring new housing supply online, and ensure affordability does not degrade even further”, UDIA national president Maxwell Shifman said.
To add further insult to injury, affordability of new housing stock has deteriorated.
Despite a decline in sales and less demand, the median national lot price increased 20% last year as developers absorbed mounting cost constraints.
The median lot price increased by 31% in Sydney ($716,000), 16% in Melbourne ($382,000) and 27% in South East Queensland ($358,000) over the previous year:
Ramping immigration to record high levels at a time when housing supply is badly constrained is a recipe for disaster.
Where will the hundreds of thousands of new migrants live when there is already a critical shortage of homes for the existing population?
The Albanese Government’s ‘Big Australia’ immigration madness has guaranteed a perpetual housing shortage, soaring rents, and an increase in homelessness.
It is an inequality disaster in the making.
