Record high arrivals
The ABS reported last week that births in Australia remained very high in 2017 at 309,142, just below the record high of 311,104 recorded for the preceding year.
Yesterday morning the bureau also reported that permanent and long-term arrivals hit another record high of +825,480 over the year to October 2018.
This represented a strong +6.1 per cent increase from a year earlier, and was a world away from the +709,110 for the year to October 2015.
Substantial numbers, indeed.
Education arrivals were also tracking at levels suggesting that international student enrolments will remain an ongoing force for demographic trends.
There were also 9.2 million short-term arrivals over the year, comfortably up from 8.8 million a year earlier, as the tourism boom powers on.
Rental market lags
Record high arrivals into a period where it's rarely been tougher to get an investment loan across the line, then.
My admittedly somewhat flaky models suggest that housing markets could swing towards a rental shortage at the national level ex-Sydney by the time of the election next year, once the seasonally soft Xmas period has passed.
Counter-intuitively this will not become apparent any time soon in any of the three major capital cities, however.
This is due to the significant lag times on apartment construction, and a still-significant volume of units bought off-the-plan completing into the Christmas break, which is always a weak time of the year for rental markets.
Rental market pressure is more likely to be apparent in Hobart, Canberra, Adelaide, and a
range of regional centres, before Melbourne also becomes tight around Q2 2019.
Indeed, this morning's headlines will almost certainly focus on the final cyclical blast of apartment completions in Sydney, with the vacancy rate at a lofty 3.2 per cent during this quiet festive period.
Sub-regions such as Sydney's Hills District are still chewing through a surge of completions into the two seasonally softest months of the year.
Source: SQM Research
Vacancy rates are also above the capital city average in the sub-regions of Parramatta (3½ per cent) and Western Sydney (3½ per cent), as well as in new apartment tower hotspot postcodes such as Chatswood (5.1 per cent), and North Sydney (6.7 per cent).
Below are the figures by capital city plotted on a 6mMA basis, which suggest that once the seasonal Christmas weakness passes Melbourne could experience its tightest rental market since 2010.
Melbourne's rental market appears to have become more seasonal these days, as you can see in the chart below, possibly due to international student arrivals and departures.
Hobart, Canberra, and Adelaide remain the tightest of the capital cities for now.
The population of the Northern Territory has been declining of late, suggesting that Darwin will become the softest of all capital city rental markets in 2019, as Perth continues to recover (click to expand the graphic):
The worst of the pain for apartment owners in inner-city Brisbane has now passed as the rental market swings back towards equilibrium for the Queensland capital.
Bowen on the front foot
Earlier in the year I read Shadow Treasurer Bowen's book and couldn't help but be impressed with his exceptionally keen awareness of history and those that have gone before.
Bowen is sharp as a tack and has anticipated any rental market challenges ex-Sydney arising before the 2019 election.
The ALP has accordingly pledged $6.6 billion in affordable rentals subsidies for landlords over 15 years.
Whether or not the policy proves to be a sound one, from Labor's perspective the party can at least show that they've considered any such rental market challenges before they arise.
