Gareth Aird, CBA’s head of Australian economics, warned last week that the Albanese Government’s record immigration program is driving up inflation by ensuring that demand runs ahead of supply across a number of areas.
The most obvious area where the Albanese Government’s record immigration is driving up inflation is across the residential rental market, which has seen the sharpest increase in rents in living memory:
Residential rents alone account for around 6% of Australia’s CPI inflation basket. Therefore, rents are a key driver of Australia’s stubbornly high inflation pulse.
The strong demand via immigration is also pushing up inflation across the home building industry.
Australia’s largest diversified developer, Stockland, told investors on Monday that it would lift the prices for homes in its core master-planned communities by an average of 5% to 10% in 2023-24.
Prices of homes in Stockland’s smaller – but rapidly increasing – land lease communities sector were rising even faster, with the 420 contracts on hand at the end of September up 9% on average from the average 2023 settlement price.
“Underlying demand for our master-planned community product is solid, and we remain positive on the medium-term residential outlook, with the rebound in net overseas migration supporting demand amidst ongoing constrained land supply”, chief executive Tarun Gupta said at Stockland’s AGM on Monday.
Ramping up population demand into a supply constrained market means one thing: rising new home prices:
The Albanese Government’s reckless immigration program is not only causing financial pain to those seeking affordable housing.
It is also ensuring that Australian inflation and interest rates remains higher for longer.
