Owen Wilson, chief executive of the $27 billion ASX property classified giant REA Group, admitted that the ‘Big Australia’ mass immigration policy has created ‘goldilocks’ conditions for the industry.
“Demand remains strong, thanks to solid population growth that’s been powered by immigration, and perpetually pent-up demand”, writes The AFR’s Chanticleer.
“Wilson sees little reason for demand to drop off, particularly if rate cuts add to the tailwinds of population growth and the ever-present drumbeat of pent-up demand”.
In other words, as long as the federal government continues to import hundreds of thousands of buyers and renters into Australia, demand via population growth will remain ahead of new supply, putting upward pressure on prices and rents.
This model has worked beautifully for the property industry ever since the federal government more than doubled net overseas migration in the mid-2000s.
Australia’s housing market was driven into shortage, supporting prices and rents.
Rental inflation has surged amid extreme immigration, fueling “fear of missing out” (FOMO) in the purchase market.
The housing Hunger Games have then driven home prices and average mortgage sizes to all-time highs, despite high interest rates, as desperate buyers try to escape the rental market and compete for a limited pool of stock:
Australian home buyers have stretched themselves to the maximum to buy into the housing market, as evidenced by the record gap between home prices and borrowing capacity:
Australia may be a “goldilocks” market for property firms like REA Group, but it is a Hunger Games market for renters and first home buyers.
