Housing shortfall evident as overseas arrivals climb: Economist

ABS data has revealed overseas arrivals have increased once again as the growing population draws more concerns over housing supply.

The latest Australian Bureau of Statistics (ABS) data on Overseas Arrivals and Departures has revealed that total arrivals increased by 50.3 per cent to 1,544,700, an annual increase of 517,000 as of August 2023.

Australia’s growing population has sounded alarm bells in regard to the ongoing housing supply issue, with PropTrack senior economist Eleanor Creagh stating that the accelerating population growth has “revealed a startling shortfall between the number of people expected to call Australia home, and the number of homes for those people to live in”.

“ABS data revealed the highest national quarterly population increase on record in the March quarter, and the gains from migration have never been higher,” Ms Creagh said.

“But with the pace of building behind where it needs to be to house the booming population, more needs to be done to avoid worsening an already dire housing crisis.”

The ABS’ March quarter data revealed Australia’s population rose by 563,000, or 2.2 per cent, over 12 months, with 454,000 of that coming from immigration. Permanent and long-term arrival data in July indicated the increased migration is continuing and could reach a net migration of 500,000 or more in the last financial year.

According to Ms Creagh, smaller household sizes during the COVID-19 pandemic resulted in significant additional demand for housing, roughly offsetting the lost population increase across both 2020 and 2021 combined.

“Although recent data suggests that average household sizes (AHS) have begun to increase in the capital cities in recent months, the AHS remains below pre-pandemic levels and was at a historically low 2.49 people per household in January 2023,” she added.

“Net migration has fully caught up the pandemic losses and then some, meaning demand for housing is much stronger.”

Although the federal government has recognised the housing supply issue (through introduction of the Housing Australia Future Fund Bill), Ms Creagh warned that the pace of building is lagging behind the goal of 1.2 million homes over the next five years.

“To meet the 1.2 million goal, we need to increase our pace of building by almost 40 per cent from where it currently stands,” Ms Creagh said.

“Concerningly, with estimated annual population growth of close to 600,000 people per year from both natural increase and net overseas migration, the new residents will simply absorb the 1.2 million homes based on current household sizes.”

Bank economists have previously voiced their concerns over the growing population, with NAB chief economist Alan Oster and AMP chief economist Shane Oliver both stating that more migration control is needed to address the housing shortfall.

From Mortgage Business

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