Renters bear the brunt of migration surge
KPMG modelling reveals the breakneck pace of migration is causing rents to rise at twice their normal pace.
The breakneck pace of migration is causing rents to rise at twice their normal pace, as modelling by KPMG reveals the price millions of households are paying for uncapped temporary worker schemes that have sent population growth soaring.
As the Albanese government prepares to reveal a revamped migration strategy, KPMG chief economist Brendan Rynne said the modelling showed a powerful and “unsurprising” correlation between rental increases and the ratio of population change to new homes built.
“The change in that ratio of population to building accounts for around three-quarters of the change in the CPI (consumer price index) rents index,” he said.
The analysis shows the population increase per new dwelling completed now exceeds the levels observed during the immigration boom of 2008.
The historical relationship of population growth to home building in the decade to 2020 pushed rents higher by around 2.8 per cent a year. Based on the budget population forecasts for 400,000 net migration in 2022-23, 315,000 in 2023-24, and 260,000 in 2024-25 – and assumptions on the pace of construction work – the impact of demand and supply dynamics will push rents up 4 per cent a year.
In a report to be released this week, KPMG economists also predict house prices will rise by 5 per cent in the year to mid-2024 before growth accelerates to closer to 10 per cent over the following 12 months.
“House prices are starting to recover modestly this year, and they will accelerate next year, fundamentally because the impact of low supply and high population growth is overcompensating for the higher interest rates,” Dr Rynne said.
Asking rents are jumping at double-digit rates as vacancy rates plunge to record lows.
Discontent about housing affordability is rising, posing a growing political problem for the Albanese government.
The Greens, who are pushing for a freeze on rents, have accused Anthony Albanese of “abandoning” renters.
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