Rental crunch
It's a kind of morbid fascination with which one observes current housing market policies, and the looming rental market hyperinflation.
With the government apparently committing to growing the population at around 500,000 per annum, APRA stating that the 3 percentage points lending assessment buffer for landlords must remain in place (not sure why), and economists barking at the Reserve Bank to jack up interest rates further, it feels like something will have to give as inbound migration into Australia ramps up to record highs.
It's a trifecta of policy settings which must surely lead to a catastrophe in the rental market (actually, it already has around where we live, with the local noticeboards now almost entirely populated by requests for a room to share, or a place to pitch a tent).
The December lending indicators figures from the ABS showed lending to landlords down -28.3 per cent over the year, and lending for new housing crumpling to -62.4 per cent lower than January 2021 levels.
The Housing Industry Association reported:
Source: HIA
January is normally a quieter month for the rental market - before the international students flood back into the country for the February term - yet Domain reported that rental vacancy rates fell from 1.1 per cent to an all-time low of just 0.8 per cent over the past month.
Rental vacancies declined further in 7 of the 8 capital cities, as well as across regional Australia.
House rents in the capital cities were up around +15 per cent over the year to January, while for capital city units rents jumped +18 per cent, according to Domain.
Source: Domain
PropTrack reported that it expects to see rents accelerating again in 2023, which after the first month of the year appears to be correct.
Source: PropTrack
The strongest growth in rents is now being driven by inner city markets, with tens of thousands of international students set to enter the country this month, including from China again.
CoreLogic's Tim Lawless reported that no new supply is currently being added to the rental market, due to a range of disincentives for landlords.
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The US nonfarm payrolls figures for the month of January are always tricky to interpret due to population adjustments, but at first glance appeared to be very strong, with the unemployment rate coming in at just 3.4 per cent...the lowest level since 1969.
Perhaps just as significantly, average hourly earnings increased only modestly by +0.3 per cent over the month, and +4.4 per cent over the year.
That's well down from recent highs of around 6 per cent, with no signs of inflationary pressures in evidence in these numbers.
We'll have to sit back and see what analysts make of the extremely strong headline jobs figures...
