CBA economist Harry Ottley published the following chart showing how rental growth is highly correlated to the ratio of population growth to new apartment construction:
![Housing supply and rents](https://api.macrobusiness.com.au/wp-content/uploads/2024/04/CBA-Population-change-to-unit-supply.png)
The news on this front is disastrous for renters, with approvals for the construction of new apartments plunging to their lowest level since February 2012:
![Apartment approvals](https://api.macrobusiness.com.au/wp-content/uploads/2024/04/Apartment-approvals-Australia.png)
Annual high-rise apartment approvals were running 59% below their peak in February, whereas low-rise apartments were 86% below their peak:
![High-rise apartment approvals](https://api.macrobusiness.com.au/wp-content/uploads/2024/04/High-rise-apartment-approvals.png)
The above charts signal that apartment construction will continue to fall in the period ahead, in part due to the surge in construction costs since the pandemic began:
![Construction costs](https://api.macrobusiness.com.au/wp-content/uploads/2024/04/CBA-Resi-Construction-Costs.png)
At the same time, Australia’s population growth has surged and is anticipated to remain at historical highs over the foreseeable future.
![Australian population change](https://api.macrobusiness.com.au/wp-content/uploads/2024/03/Figure-1.png)
Strong population demand and falling supply can mean only one thing for Australian renters: more misery.
Rental vacancy rates will remain historically tight:
![Rental vacancy rate](https://api.macrobusiness.com.au/wp-content/uploads/2024/04/Domain-rental-vacancy-rates.png)
And rental inflation will remain strong, causing more financial pain for tenants and forcing more Australians into shared housing or homelessness.
![Capital city rents](https://api.macrobusiness.com.au/wp-content/uploads/2024/04/Capital-city-asking-rents.png)
It is an inequality disaster in the making.