Housing crisis threatens economy: NAB boss Ross McEwan

Australia’s spiralling housing crisis could soon have bigger implications for the economy, one of the nation’s top bankers has warned.

Surging immigration levels have been driving house prices. Picture: NCA NewsWire / Max Mason-Hubers

The nation’s spiralling housing crisis could soon represent a broader hit to the economy with growth being squeezed, according to one of the nation’s most senior bankers.

National Australia Bank chief executive Ross McEwan said one of the responses to easing pressure on housing stock – curbing immigration — will have an unintended impact on growth.

“I think one of the biggest issues for me around housing is we just don’t have enough of it here in Australia,” Mr McEwan said.

“And that will slow down the growth of this economy because if you don’t have houses for migrants to come in to, we’ll soon be cutting off the migration levels coming into the countryside. So we’ve got to get the housing going so we can actually get more migration, of the right types, to help grow this economy — and that’ll keep Australia growing.

“If we don’t, well, I think Australia will slow down accordingly”.

The comments by Mr McEwan were made in an internal video to staff, with the NAB boss preparing to retire from the bank at the end of this week after more than four years in the role. Before running NAB, Mr McEwan headed up UK lender Royal Bank of Scotland.

Outgoing NAB chief executive Ross McEwan. Picture Dean Martin

Home prices have been surging, with prices now among the highest in the world. At the same time, rental affordability is now at its worst levels on record, with surging immigration levels putting pressure on the nation’s property stock.

But planning rules have been keeping a lid on supply, with building approvals tracking near decade lows.

But immigration which is running at record levels after years of being closed off during the Covid pandemic is now causing a political backlash given it is adding to the already large housing supply shortfall.

Net migrant arrivals increased 73 per cent to 737,000 from 427,000 arrivals a year ago,

according to data from the Australian Bureau of Statistics released last week. In the five years leading up to the Covid pandemic, the average number of migrant arrivals was 515,000 per year.

Prime Minister Anthony Albanese has put housing front and centre of his government pledging to build 1.2 million homes in five years. Although economists have already raised doubt over hitting these targets given persistent labour and material shortages.

Last week Reserve Bank governor Michele Bullock said issues around development policies, and infrastructure are important pieces in helping to unlock housing supply.

Mr McEwan said if we can solve the issue around housing Australia can keep the economy growing at a good pace.

Despite the immediate pressures, the NAB boss said he remains firmly optimistic about Australia’s longer term prospects.

“I’ve never been a pessimist about an economy that’s got great mineral resources that we can export, that’s got a great tourism industry, we have a great education system that people want and will pay for. We’ve got so much going on for this country and people want to come to this country. I think this is a place to be very optimistic about.

“There’s a lot to like about Australia and about New Zealand.”

Originally published as Housing crisis threatens economy: NAB boss Ross McEwan