According to CoreLogic’s most recent rental market data, apartment rents have surged in the five major capitals, as shown below:
Source: CoreLogic
This explosion in rent comes on the heels of a drop in unit rental vacancies to just 0.9%, the lowest percentage on record:
Source: CoreLogic
The forward-looking indicators are concerning for the apartment rental sector.
On Tuesday, the Australian Bureau of Statistics released dwelling approvals data for April, which showed that the number of apartments (units) approved for construction had collapsed to its lowest level since January 2012:
Apartment approvals in April (3759) were down 64% from their peak in June 2015 (10,553).
The next chart plots annual high-rise apartment approvals on an annual basis nationally and across the major jurisdictions:
Nationally, high-rise approvals have fallen 53% from their October 2015 peak.
High-rise approvals have fallen most heavily across New South Wales, where they are down 70% from their September 2016 peak.
Victoria’s high-rise approvals are down 58% from their October 2015 peak, whereas they are 43% lower than their April 2015 peak across Queensland.
Melbourne developer and builder Pitard Group this month declared the off-the-plan apartment market “dead”.
Pitard noted that low client confidence, several construction firm failures, concerns about rising construction costs, and “general volatility” had made selling a project off-the-plan problematic.
The collapse in apartment approvals has arrived at the same time as net overseas migration (population growth) is soaring.
Following a record 482,000 increase in Australia’s population last year, the federal budget projects a record 1.5 million net overseas migration in the five years to 2026-27, which will grow the population by 2.18 million people:
Source: 2023 federal budget
Most of this growth is also projected to occur in Victoria and New South Wales, which are expected to receive the lion’s share of migrants.
This increased rental demand will meet falling supply, causing the rental market to tighten further and rents to rise.
Simply put, the Albanese Government’s record immigration policy is a nightmare for the rental market, driving rents into the stratosphere, throwing poorer households into financial hardship, and forcing thousands more people to become homeless.
Where will the hundreds of thousands of migrants and students that arrive each year live when there is already a severe housing shortage?
Labor’s Big Australia immigration agenda is an unmitigated disaster for renters and lower-income Australians.
