Money Minute – August 16 2017 Housing Crisis Looming?
The housing issue in Australia is a problem that’s not going away anytime soon
In some capital cities, prices have soared out of reach of typical working families. In other capital cities, such as Perth and Darwin, prices have fallen for almost three years.
The government, Reserve Bank and bank regulator APRA have tried to slow the housing markets. But they have to be careful not to further hurt the vulnerable housing markets.
And while Dick Smith launched his campaign to slow population growth in Australia … one of our most noted housing researchers, Louis Christopher from SQM Research … has come to the same conclusion.
You can see here … in the last 20 years our annual intake of migrants from overseas has grown sharply – and last year was 208,000 people. That’s on top of the natural increase in our own population.
Louis Christopher’s point is that new migrants are tending to stay in the two big capital cities – Melbourne and Sydney.
Last year Victoria’s population grew at almost 2.5 percent … New South Wales almost 2 percent, Queensland about the same but South Australia, Tassie and WA were just half a percent.
Now with an ageing population – Australia needs younger workers, paying taxes. Dick Smith doesn’t buy that argument … but most economists and the government do.
Problem is, if everybody crams into Sydney and Melbourne … affordability issues get worse and worse. How do we know that? Because despite the so-called housing crisis – with too many apartments being built, rents in Melbourne and Sydney are going up, not down. Both are up around 3 percent in the last year.
So one option – radical I know – is that new migrants be granted a visa … on the condition they spent the first four or five years in regional areas – or in smaller capital cities. Sydney and Melbourne are out of bounds.
Hard to police? Sure. But it’s one answer to a problem where, right now, there are very few.
Dow Jones up 5. Dollar 78.2 US cents.