If you’re finding it tough buying a property or getting a rental at the moment, you might want to fasten your seatbelt for the wild ride to come.
The government is expecting a mini-population boom in the form of 700,000 plus migrants entering the country over the next couple of years.
That’s essentially adding on another 3% of the population we have now.
And when new migrants come to Australia, not many of them land in sparsely populated regions. The vast majority come to Sydney and Melbourne, the two cities where purchase prices and rental prices are the most expensive already.
Where will they live?
Vacancy rates for rentals are at historic lows all over Australia and there are major declines in properties listed for sale.
So, add to the mix the biggest population boom over 2 years in history, surpassing the period in 2008 to 2009 when 456,000 new migrants entered Australia. That growth rate was 2.1% higher than the average annual rate.
Now, we’ll be getting 30% higher growth in population than in 2008
Why is this happening?
This tactic is being employed by governments to service debt. When they had the surge in 2008, the government dropped interest rates and welcomed migrants to try to pay off the mess of the GFC.
This time around, an adjusted treasury forecast now sees up to 900,000 arriving in Australia into 2025. The government no doubt hopes these students, tourists and workers will help service the trillion dollars of debt written during the Covid lockdown and stimulus period.
What does this mean?
In reality, we can’t have 900,000 people coming in over two years, when we can’t build enough housing to accommodate that many people. Currently we can’t build enough housing for the number of people already here.
Every week builders are going broke and projects are unfinished. Major builders are collapsing with hundreds or thousands of projects underway. Who will finish building them?
The hundreds of thousands of people descending on Sydney and Melbourne will be entering markets where vacancy rates are hovering around the 1.3% mark.
Prices will have to rise and rents will have to rise. A population boom will not help Australia’s housing crisis.
Forecasts suggest Australia will be close to 50 million strong by 2050, with Sydney and Melbourne each hosting about a third of that number.