Australia’s rental crisis will keep getting worse


In this interview with Luke Grant from Radio 2GB, I discuss the latest disastrous rental and construction data, which suggests that Australia’s rental crisis will worsen.

I also discuss the latest polling showing that Australians categorically reject Big Australia immigration.

Edited Transcript:

Domain released its March quarter rental report, and the combined capital city house rents surged by 5% in the March quarter, the largest quarterly increase in 17 years and the second highest on record.

Domain house rents

Source: Domain

For those who want a unit, rents rose for a record 11th straight quarter by 3.3%:

Unit rents

Source: Domain


It is the same problem: too much population demand, not enough supply:

Housing supply and demand
This imbalance has pushed rental vacancy rates to an all-time low and driven rents through the roof.

Domain rental vacancy rates

According to PropTrack, rents have risen 38% since the pandemic began. This is why we have a rental crisis—there is no other reason. We are importing too many renters into the country, straining the rental market and driving rents through the roof.

This is forcing people into group housing, homelessness and financial stress. It is as simple as that.

According to Albo’s housing target, we need to build 60,000 homes per quarter.

However, the ABS released data on dwelling commencements, showing that only 37,200 homes were commenced in the December quarter.

Dwelling commencements

That was the worst quarterly result since 2012. Based on that run rate, the annual run rate of 149,000 is 91,000 below the Albanese government’s construction target of 240,000 homes a year.

To give some local perspective, New South Wales commenced only 10,700 homes in the December quarter, which gives an annual run rate of 43,000.

Based on New South Wales’ latest population growth, that is only one home per 4.3 new residents.

It is just not enough; it is as simple as that.

The latest dwelling approvals data shows the same thing: only 149,000 homes were approved if you annualise approvals for February.

Dwelling approvals

This tells you that the housing supply is going to keep falling while we experience this huge population growth.

It means more misery for Australian renters, and prices will keep rising, too.

Housing supply is headed in the wrong direction while we have record population growth. And that’s why we have an unprecedented rental crisis.

The Albanese government decided to open the immigration floodgates into a supply-constrained market, given high interest rates, high building costs, builders competing for labour against infrastructure projects, builders going broke, etc.

construction costs

It was pure policy idiocy by the federal government, and that’s why Australians are under rental stress and are being forced into shared housing and homelessness.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.