Sophie Foster

EXPERTS are warning that Australia needs to cut immigration levels to short-circuit surges in housing prices and significant interest rate rises.
The latest SQM Research note warned that population surges linked to immigration were to blame for the heat not going out of certain capital city markets.
SQM head Louis Christopher said even the RBA and APRA were unable to be effective in the face of that.
“If we do not address this issue in the manner required, it is unlikely housing affordability is going to materially improve from this point. Indeed, affordability could further deteriorate in the form of higher rents and higher house prices with the only other remedy being aggressive interest rates rise from the RBA,” he said in the latest SQM research note.
SQM data had found that asking rents had grown “well above the inflation rate” in Melbourne with houses up 4.6 per cent and units up 5 per cent in the year to August 12.
“Excessive population growth is driving rents higher in that city, as well as house prices,” his latest research note said.
“In this front, I agree with Dick Smith and other economists on proposed immigration cuts. The surge in population is the primary reason why the RBA’s warnings last year and earlier this year of an oversupply in Sydney and Melbourne have not materialised.

“I suspect surging population growth is also the reason why APRA’s actions in 2015 to slow the investor market place in order to take the heat out of the Sydney and Melbourne market only worked temporarily.”
The comments come as SQM Research found the national vacancy rate in July was 2.3 per cent with 75,733 homes vacant – down from 2.4 per cent in June.
He warned that in Sydney (2 per cent vacancy rate) and Melbourne (1.7 per cent), the tight rental market was seeing many people spend 30 per cent or more of their income on rent.
There was also no relief in sight for Hobart which was “very tight” (0.5 per cent) and where market rents had “effectively risen by over 10 per cent in the last 12 months”.
“Unfortunately, few developers will build in Hobart due to the high transportation costs of moving materials across from the mainland plus the historical risks attached to the local economy.”


WEEKLY ASKING RENT:
Brisbane: House $445; Unit $368
Hobart: House $369; Unit $327
Adelaide: House $375; Unit $292
Perth: House $423; Unit $328
Melbourne: House $508; Unit $399
Canberra: House $560; Unit $419
Darwin: House $529; Unit $409
Sydney: House $729; Unit $520
National: House $425; Unit $349