Two factors making Australia’s housing crisis worse

Australia’s population grew by 600,000 last year, while sluggish housing permits reached 167,000, below 2019 levels. Mr Strickland said the increase had “much greater” the market’s ability to keep pace.

“The ratio of residents per new home is 3.6, the worst in the history of the series dating back to 1984,” he said.

Commonwealth Bank economist Harry Ottley noted that current population growth is the strongest in more than 50 years

Housing supply has been a hot issue this year, especially as the Albanian government tried to negotiate the approval of its historic $10 billion Housing Australia Future Fund, a key election promise.

But many economists doubt the feasibility of the fund’s target of building 1.2 million homes over the next five years – a run rate of 240,000 homes per year, which has never been done before. Mr Strickland said it was difficult to imagine how this could be done without creating inflationary pressures.

Without further supply to meet population growth and fill the structural gap left by household composition, upward pressure on rents and property prices is unlikely to ease, according to former RBA governor Philip Lowe.

House prices rose 0.9 percent in October, compared with the 0.7 percent monthly increase recorded over the past three months, house price data released by the Bureau of Statistics on Wednesday showed.

Since reaching a low point in January, national house prices have risen by an average of 7.6 percent.

“Prices are expected to surpass the all-time high of April 2022 by mid-November given the current pace of growth, despite a 400 basis point tightening by the Reserve Bank,” said St. George senior economist Pat Bustamante.

Meanwhile, average rents rose 7.6 percent in the year to September 30, the highest level since 2008, supported by limited supply.

Dr. Lowe suggested this year that people struggling to pay rent should consider finding a roommate or moving back home.

“The way this ultimately resolves itself is unfortunately through higher housing prices and higher rents,” he said.

“When rents rise, people decide not to move out, or if you don’t have a home office, you get a roommate. The increase in supply may not happen immediately, but higher prices do cause people to cut back on housing.”

Although a dry statement that reflected prevailing market dynamics, the comments came in for heavy criticism.