Indication that Australia's housing crisis is about to worsen

Although it's a minor point in Labour’s budget, this prediction could pave the way for Australia's housing crisis.

While the country laments one of the worst housing shortages in history, the Federal Government's official nett overseas migration (NOM) forecast, which has been sharply increased, was buried in the appendix of Budget Paper 3.

NOM is now expected to hit a record high of 400,000 in 2022-23 before falling to 315,000 in 2023-24. Then it will fall to 260,000, where it will stay over the forward estimates.

Thus, the latest budget has locked in a permanently higher NOM that is 25,000 higher than the 235,000-projection contained in the previous budget, the 2021 Intergenerational Report, and the 2023 Population Statement.

For all the claims made by Home Affairs Minister Clare O’Neil that Labor is not delivering a ‘Big Australia’, the federal budget’s latest forecasts certainly say otherwise.

This projected long-term NOM of 260,000 is 40,000 higher than the ‘Big Australia’ immigration the nation experienced in the 15 years leading up to the pandemic, which averaged around 220,000 a year.

This ramp-up in immigration has been engineered by the Albanese Government via:

• Extending the number of hours students can work and the length of their stay in Australia after graduation

• Employing 500 people to clear the “one million” visa backlog as quickly as possible

• Lifting the annual permanent non-humanitarian migrant intake to a record high of 195,000 (from 160,000)

• Easing entry requirements for Indian students and workers

Australia’s population is officially projected to increase by 2.18 million people in the five years to 2026-27, or by an average of 435,200 people each year.

The housing shortage can be good for property investors in a few ways:

Firstly, as demand for housing increases, so does the value of existing properties. This can lead to a greater return on investment for property investors who purchase property at the right time.

Secondly, the housing shortage can create an opportunity for investors to purchase properties at lower prices than they could normally obtain in a market with sufficient housing supply. This can increase the potential yield on the investment, as investors can purchase properties at a lower cost and then rent them out at a higher rate.

Finally, the housing shortage can also lead to a decrease in rental vacancy rates, which can provide an additional source of income for investors.

The housing shortage can have a direct effect on increasing rent prices. When the demand for housing is much higher than the supply, landlords have more power to increase rents. This is because there is a limited number of rental options available and competition among renters is high.

Therefore, landlords can charge a premium for their rental units, which increases rent prices. As the housing shortage continues, more renters are forced to pay higher rents, which can lead to greater incomes to property investors.

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