A leading economist has made the dire prediction that Australias diabolical housing situation is completely broken and its never going to be fixed.
Macrobusiness Chief Economist Leith van Onselen said immigration and shrinking households were driving demand for housing far beyond what supply of new homes could deliver and this would lead to a radical change to the great Australian drea.
Because weve got an ageing population, weve got all the kids that were born 20 years ago now moving into adulthood, he told 2GB.
As a result, youve got to cut immigration to lower demand to meet supply.
This is basic economics but unfortunately its going the wrong way and thats why weve got this intractable housing crisis thats just not going to get better the way it is.
Mr van Onselen pointed out the forward indicators of houses being built were tracking far below Prime Minister Anthony Albaneses fantastical 1.2 million homes over five years pledge, which requires 240,000 homes to be built annually.
The latest dwelling commencements data shows that we had 160,000 homes commenced last financial year so were you know one third, 800,000, behind the target.
He said to add insult to injury 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.
Because (former Liberal Treasurer) Peter Costellos baby bonus kids from 20 years ago are now each in adult age theyre starting to move out of home and what that means is the average household size is shrinking.
Macrobusiness Chief Economist Leith van Onselen said immigration and shrinking households were driving demand for housing far beyond what supply of new homes could deliver
The economist also said that the ballooning population of Sydney meant future residents living in high-rise shoeboxes
The problem with that is just in last year the shrinkage in the average household size means that Australia needed another 65,700 homes just to accommodate the population because weve got fewer people living in each home.
Mr van Onselen said with supply constrained by higher costs and labour shortages lagely caused by the Covid pandemic the only solution was to cut immigration to lower demand
This is basic economics but unfortunately its going the wrong way, 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 into more infrastructure or housing in the growing city.
Its an implicit acknowledgement that basically Sydneys growing too fast and that you cant build enough housing and infrastructure, he said.
Mr van Onselen said construction of new homes was badly trailing the targets set by the Albanese government or what was needed to accommodate Australias sky-rocketing population
So, if the supply side cannot deliver both when you are growing your population like a science experiment through high immigration the obvious solution there is to cut the immigration.
But unfortunately none of these groups that ever look at the demand side, its always a supply side problem.
If you are going to grow the population so strongly you are going to need more housing and more infrastructure. You cant rob Peter to pay Paul.
Mr van Onselen said the other issue is whether Australians wanted to live in high-rise shoebox apartment in a bid to fix the crisis.
Do we really want a Sydney or a Brisbane or a Melbourne whereby future residents are forced to live in high rose shoeboxes because that is the situation youre facing, he said.
Sydneys population at the turn of the century was under 4 million, its now about 5.3 million and its projected to go to over eight million by mid-century.
All what that means is if youre going to have this much population growth youre going to need heaps of housing, heaps of infrastructure.
And it also means that future residents are going to be living living in high-rise shoeboxes, that is the reality of the situation.