A leading economist has made the dire prediction that Australia’s housing situation will be ‘diabolical’ ‘is completely broken and it will never be solved,” unless voters convince politicians to drastically reduce immigration
Macrobusiness chief economist Leith van Onselen said immigration and shrinking households were pushing housing demand beyond the supply of new homes could support, and would lead to a radical change in the great Australian dream.
“Because we have an aging population, all the children born 20 years ago have now grown up,” he told 2GB.
“As a result, you have to reduce immigration to reduce demand to meet supply.
“This is fundamental economics, but unfortunately it’s going in the wrong direction and that’s why we have this persistent housing crisis that’s just not going to get better the way it is.”
Mr Van Onselen pointed out that the forecast for new home construction is well below Prime Minister Anthony Albanese’s “fantastic” promise of 1.2 million homes over five years, meaning 240,000 homes would need to be built annually .
“The latest housing commissioning data shows that 160,000 homes were completed last financial year, so we are a third, 800,000, behind target,” he said.
The economist said to make matters worse, the Australian Bureau of Statistics has just released figures showing the average size of each household has shrunk to a 19-year low of 2.49 people.
‘Because (former Liberal treasurer) Peter Costello’s baby bonus children from 20 years ago are now grown, theyhesitant to leave home and what that means is that the average family size is getting smaller,” he said.
Macrobusiness chief economist Leith van Onselen said immigration and shrinking households have pushed demand for housing far beyond what the supply of new homes could deliver
The economist also said Sydney’s growing population meant future residents would be living in “tall shoeboxes”.
“The problem with that is that the contraction in average household size over the past year means Australia needed an additional 65,700 homes to house its population because there are fewer people living in each home.”
Mr Van Onselen said that with supply limited by higher costs and labor shortages, largely caused by the Covid pandemic, the only solution was to cut immigration to reduce demand.
‘This is basic economics, but Unfortunately, things are going in the wrong direction,” he said.
Mr van Onselen also commented on a brawl 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 Sydney is actually growing too fast and you can’t build enough housing and infrastructure,” he said.
Mr Van Onselen said the construction of new homes was falling far short of the Albanian government’s targets or what was needed to house Australia’s rapidly growing population.
“So if the supply side can’t provide both if you grow your population like a science experiment through high immigration, the obvious solution is to reduce immigration.
‘But unfortunately none of these groups ever look at the demand side, it’s always a supply side problem.
‘If you want the population to grow so much, you need more housing and more infrastructure. You can’t rob Peter to pay Paul.
Mr Van Onselen said Australians need to wake up politicians about unsustainable immigration
“If you are listening to this and you don’t like this situation, you should tell your MP to restrict immigration because those are the simple facts of the matter.”
Mr Van Onselen said the other issue is whether Australians want to live in a “tall shoebox” apartment 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 pink shoeboxes because that is the situation you face,” he said.
‘Sydney’s population was less than 4 million at the turn of the century, now it is around 5.3 million and is expected to rise to over 8 million by mid-century.
“All that means is that if you get that much population growth, you’re going to need an enormous amount of housing and an enormous amount of infrastructure.
‘And it also means that future residents will be living in high shoeboxes, that is the reality of the situation.’
