This long-run driver is pointing to rising house prices… and confusion across the country.
With the short-run indicators of the cycle all turning (have you tuned into what auction clearance rates are doing?), it’s worth remember that there are some strong long-term drivers at play too.
In fact, immigration into Australia is strong and only getting stronger.
On latest figures, there were 294,430 net permanent and long-term arrivals into Australia in the year to May 2019. That’s up 7% on a year earlier.
To put that in perspective, inflation and GDP are growing at about 2%. So 7% is very solid. It amounts to a serious injection of housing demand.
And even though there was a bit of talk at the most recent election about lowering immigration (didn’t happen), there doesn’t seem to be any political will to actually turning down or world-beating immigration program.
And that’s because high-immigration enjoys support across the political spectrum. On the right, high immigration beefs up consumer pools and creates slack in the job market, which holds down wages.
But on the left, you get confused garbage like this:
AREAS WITH POOR ATTITUDES TO IMMIGRATION HAVE WEAKER HOUSE PRICE GROWTH
(Can’t you just hear your primary school headmaster’s voice with these so-called ‘poor attitudes’?)
Areas with poor attitudes to immigration have weaker house price growth, new research shows
Communities where people oppose immigrants moving in experience less house price growth than neighbouring suburbs with more accepting residents, new research has shown.
Immigration lifts house prices by increasing demand for an already limited supply of housing and anti-immigrant communities were excluding themselves from this benefit, Deakin University researcher Chris Doucouliagos said.
“In theory, if people are more predisposed towards immigrants there may be a higher price as well, but we found that those areas with negative attitudes get a lower increase in house prices,” Professor Doucouliagos said.
All communities, no matter their attitude to immigration, benefited from its effect on home values, but those who didn’t want new migrants moving in benefited less, he said.
… “Immigration is a major policy issue globally. It’s always in the news, there are a lot of claims made,” Professor Doucouliagos said. “When you look at the evidence, none of those claims stand to scrutiny. We find no evidence that it reduces asset values.
“There is no case for restricting immigration on the basis of house prices. Our takeaway is ‘love thy neighbour’.”
What planet is this “professor” on?
A few years ago when cashed up Chinese buyers were outbidding locals at auctions with suitcases full of cash, people weren’t worried about the Chinese buyers “reducing asset values”.
They were worried about their kids never being able to afford a house.
And that’s exactly what the good professor just showed. I mean, you just as easily use this data to tell a completely different story:
“Areas with ‘satisfactory’ attitudes to immigration have housing affordability issues.”
But I reckon we’re about five to ten years away from lefties connecting those two dots.
And that means immigration will remain elevated, and pressure on house prices will remain.