Mark Bouris: How Australia stacks up on housing vs. the world

Aussie finance guru Mark Bouris has taken aim at the “predictable” reason behind Australia's housing crisis.

COMMENT

Australia’s housing crisis didn’t happen by accident.

It is the predictable result of political decisions, and while our leaders insist “every country is in the same boat”, a quick look overseas shows the opposite. Other nations are cooling their markets. We’re overheating ours.

Start with the Albanese Government’s new 5 per cent deposit scheme. It was sold as a ticket into home ownership. Instead, it has supercharged demand in a market already stretched to breaking point. As news.com.au revealed, median capital city prices have jumped $35,000 in just three months since the scheme launched on October 1.

Why? Because the scheme has no caps and no income limits. Anyone can buy a home with a five per cent deposit and government backing. In a market with chronic undersupply, dropping thousands of new buyers into the system does exactly what economists warned: it sends prices up. Fast.

The Insurance Council of Australia warns the scheme could push home values 10 per cent higher in its first year alone. In other words, a program designed to make housing affordable is making it less affordable.

Albanese Government’s new 5 per cent deposit scheme has supercharged demand in a market already stretched to breaking point. Picture: NewsWire / Jeremy Piper

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But while Australia is inflating demand, countries facing similar pressures are doing the opposite and seeing results.

New Zealand provides the cleanest real-world lesson in housing economics. Net overseas migration there has collapsed to just 10,628 for the year to August – far below the decade average of 49,000 and more than 120,000 below the 2023 peak.

With population growth cooling and construction continuing, New Zealand is now building more homes than it needs. The result? A rental market doing something Australians can barely imagine: falling.

The TradeMe rental index is down 3.9 per cent in a year, taking prices back to mid-2023 levels. Listings are up. Searches are down. Bond data shows the sharpest rent decline in 30 years. It is the exact outcome economists predict when population growth falls below the rate of new housing supply.

Mark Bouris says Australia’s housing crisis is the predictable result of political decisions.

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Canada shows the same pattern. Population growth has slumped to its second-slowest quarter in a decade; temporary migrant numbers have dropped sharply. And rents are falling: 3.2 per cent down nationally, with major-city drops of nearly 10 per cent in Calgary and Vancouver. It’s the 12th straight month of rent declines.

Meanwhile, Australian rents have surged 43 per cent in five years, and are rising again as migration ramps up. Our vacancy rates are near record lows. Our population growth is still running ahead of construction. And our governments keep pumping demand.

And here’s the real kicker: the countries doing housing best aren’t “lucky”. They’ve made structural choices Australia refuses to make.

Look at Tokyo. A city of 37 million people – more than all of Australia – yet its rent growth is among the lowest in the developed world. Why? Because Tokyo builds. Constantly.

Tokyo alone builds more homes each year than London, New York and Sydney combined – and that’s why its rents stay stable. Tokyo doesn’t fight density – it embraces it – producing endless supply and stable prices.

Tokyo’s rent growth is among the lowest in the developed world. Picture: Getty

Or look at Dallas-Fort Worth in Texas. It’s one of the fastest-growing regions in America. It adds 100,000 new residents a year yet still keeps housing affordable. Why? Because they build vast amounts of land-release housing at speed and scale. A typical new home near Dallas sells for under $US400,000 ($A602,000). Good luck finding anything similar near Sydney for under a million.

Then consider Singapore, where 80 per cent of the population lives in public housing and 90 per cent of residents own their homes. Singapore achieves this through relentless construction, disciplined savings via its Housing Provident Fund, and a housing system designed to match population growth with supply – not lag years behind it.

Median capital city prices have jumped $35,000 in just three months since the scheme launched on October 1.

These places don’t have magic. They simply build more than they consume. Their populations grow at a pace their housing systems can absorb.

Australia, by contrast, is importing more renters than it is building homes for while simultaneously pumping demand through subsidies like the 5 per cent deposit scheme. It is the worst possible combination.

Our crisis isn’t global. It’s self-inflicted.

And until political leaders accept the basic truth – that supply must exceed demand – we will remain the outlier: the rich country with the world’s most expensive dirt.

Mark Bouris is Executive Chairman of Yellow Brick Road Home Loans

Originally published as Mark Bouris: How Australia stacks up on housing vs. the world