We need a grown up conversation about fast migration growth and housing. It's almost like the very same people in Australia who say our housing industry is not producing enough homes, and supply is the answer to why ownership among 35 year olds has dropped to half what it was in the 80s, are blocking their ears when you try and say that the logic of their position is to put a hold on in-migration. They may even call one racist: usually proof that the argument has been lost.
The reality is being discussed in the UK and not just by right of centre newspapers but by academics and consultancies too. This UK Telegraph piece points out that in-migration is heavily concentrated in city rental markets, as it is in Australia. then it quotes work from Capital Economics which estimates UK immigration in the two years to June 2023 led to an additional 430,000 households wanting to privately rent homes, 'pushing rents up 11pc higher than they would otherwise have been'. It's worth noting that until May 2022, annual rent growth in England had not exceeded 3.7pc for nearly 20 years. Then post Covid, in-migration ramps up dramatically. From this date, for the next 22 months in a row, rent growth would either match or hit a new record high, peaking at 9.1pc in March 2024. By July this year, the annual pace of growth was still 8.6pc – more than double the previous record high.
I'd be interested to see what the Australian data would show -in a context remember of even faster growth per head of population due to in-migration than the UK. The UK has not been able to generate a housing response to mop up this extra demand and of course there are plans in the UK to 'improve the planning system' and 'reduce 'red tape' rather than to seriously look at migration policy - when the former is a lot less impactful and immediate than the latter. Australia's population growth being faster and its housing industry being smaller (27 million versus 65 million in the market remember) suggests an even greater impact here and need to reflect on growth. But again, the emphasis in Australia has been not on what national governments do to stimulate excess demand - migration, tax and monetary policy - but on what the public and private sectors at local and state level are supposed to do in an essentially futile attempt to mop up this demand. Inflation is caused by 'too much money chasing too few goods'. I have said repeatedly that I am content to support efforts to increase the number of 'goods' (that is homes, as long as we understand that the limits on the private sector supply of homes for sales is intrinsic to their business model, and that we need a shedload of non-market homes generated by governments) but wonder why there is so little interest in the 'demand side' problem. BTW why don't state governments tell national government that while the former are trying to up supply it's a bit like a dog chasing its own tail unless the Feds also join the party on demand.