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:
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:
Annual high-rise apartment approvals were running 59% below their peak in February, whereas low-rise apartments were 86% below their peak:
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:
At the same time, Australia’s population growth has surged and is anticipated to remain at historical highs over the foreseeable future.
Strong population demand and falling supply can mean only one thing for Australian renters: more misery.
Rental vacancy rates will remain historically tight:
And rental inflation will remain strong, causing more financial pain for tenants and forcing more Australians into shared housing or homelessness.
It is an inequality disaster in the making.
