A leading economist has made the dire prediction that Australia’s “diabolical” housing situation ‘it’s completely broken “And it’s never going to be fixed” unless voters convince politicians to drastically reduce immigration.
Chief macro economist Leith van Onselen said immigration and household downsizing were driving housing demand beyond what the supply of new homes could support, and this would lead to a sea change in the big dream Australian.
“Because we have an aging population, all the children who were born 20 years ago are now reaching adulthood,” he told 2GB.
“As a result, immigration must be reduced to reduce demand and meet supply.”
“This is basic economics, but unfortunately it’s going in the wrong direction and that’s why we have this intractable housing crisis that’s just not going to get better as it is.”
Van Onselen noted that future indicators of housing construction were well below Prime Minister Anthony Albanese’s “fantastic” promise of 1.2 million homes in five years, which calls for 240,000 homes to be built a year.
“The latest data on housing construction shows that last year we had 160,000 homes started, so we are a third, 800,000, behind the target.”
He said that “to add insult to injury”, the Australian Bureau of Statistics has just released figures showing the average household size has fallen to a 19-year low of 2.49.
“Because (former Liberal treasurer) Peter Costello’s baby bonus kids from 20 years ago are now adults and they’re sstarting to move house and What that means is that the average household size is shrinking.
Chief macro economist Leith van Onselen said immigration and household downsizing were driving demand for housing far beyond what the supply of new homes could deliver.
The economist also said Sydney’s increasing population meant future residents would live in “high-rise shoeboxes”.
“The problem with this is that just last year the reduction in average household size means Australia needed another 65,700 homes just to accommodate the population because we have fewer people living in each household.”
Van Onselen said that with supply limited by higher costs and labor shortages recently caused by the Covid pandemic, the only solution was to reduce immigration to reduce demand.
“This is basic economics, but Unfortunately, it is going in the wrong direction,” he said.
Van Onselen also commented on a fight that has broken out between urban policy think tank the Committee for Sydney and NSW government figures over whether money should go towards more infrastructure or housing in the growing city. .
“It’s an implicit recognition that basically Sydney is growing too fast and not enough housing and infrastructure can be built,” he said.
Van Onselen said new housing construction was far behind targets set by the Albanese government or what was needed to accommodate Australia’s growing population.
‘So if the supply side cannot offer both when the population increases as if it were a scientific experiment through high immigration, the obvious solution is to reduce immigration.
‘But unfortunately none of these groups look at the demand side, it is always a supply-side problem.
‘If the population is going to increase that much, it will need more housing and more infrastructure. You can’t rob Peter to pay Paul.
Van Onselen said Australians needed to give politicians a wake-up call about unsustainable immigration.
“If you are listening to this and you don’t like this situation, you should tell your MP to reduce immigration because those are the simple facts of the matter.”
Van Onselen said the other question was whether Australians wanted to live in “shoebox” apartments in a bid to solve the crisis.
‘Do we really want a Sydney or a Brisbane? or a Melbourne where future residents are forced to live in tall shoe boxes because that’s the situation we face,” he said.
‘Sydney’s population at the turn of the century was less than 4 million, it is now about 5.3 million and is projected to reach more than eight million by mid-century.
‘All that means is that if you’re going to have that much population growth you’re going to need a lot of housing, a lot of infrastructure.
“And it also means that future residents will be living in high-rise shoe boxes – that’s the reality of the situation.”