Net immigration elevated
Over the year to April 2024, net permanent and long-term migration into Australia remained extremely high at +488,000.
This was down very slightly from March, when net immigration was...well, also +488,000.
Dr Alex Joiner of IFM Investors pointed out that on 3-month average basis the labour market is still needing to digest an unusually large increase in the civilian population, posing a risk of rising unemployment in the second half of 2024.
Indeed at the current pace the economy needs to add around +40,000 jobs per month to keep unemployment steady, so it may not be too long before we see an unemployment rate rising to above 4½ per cent (albeit tomorrow's data should show a still-solid 4 per cent or so reported, in seasonally adjusted terms).
Rental seasonality
With around 2¾ million temporary visas on issue for Australia these days and a record high number of international students, the rental market is likely to be a bit more seasonal through the year than was once the case.
The blue line in the graph below shows just how much rental demand has been darting around in recent years, given all the various disruptions to international travel.
In particular, the month of May is a quiet time for international students given the most common University and college term times, and thus we'll see more departures than arrivals in the next month's statistics.
Indeed, SQM Research has already recorded a
material decline in asking rents over the past month (-0.5 per cent) for the first time since April 2020, while the rise in Central Business District vacancies with lower student demand was cited as a key reason for more rentals becoming available in May.
The 6-month trend in rental vacancies still underscores the extremely low vacancy rates in Perth (0.6 per cent) and Adelaide (0.6 per cent), and now to a lesser degree Brisbane (1 per cent).
This monthly decline in asking rents may prove to be both temporary and seasonal, but the year-on-year slowdown does suggest another potential tick in the box for the disinflation story, given that surging rents were one of the key inflationary drivers due to chronic supply pressures.
Cost of living blitz
Curiously, the Queensland state government has been unleashing such an insane range of cost of living announcements and measures - in a desperate attempt to save the forthcoming election in the face of dire polling - that this could even move the needle at the national level for consumer price inflation, pushing headline CPI back down to 3 per cent or lower.
Source: Queensland Labor
Of course, this doesn't mean that core or underlying inflation measures will fall in anything like the same way, but it may prove to mechanically reduce headline inflation across the financial year to 30 June 2025.
Separately, the Queensland state government has doubled the first home owners grant to $30,000, while increasing the relevant stamp duty exemption threshold to $700,000 (and the concession phased out up to the $800,000 purchase price point).
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