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The Australian government’s Mid-Year Economic and Fiscal Outlook (MYEFO) predicts a firm uptick in economic growth, seeming to solidify the strength of the property market in the year ahead.
It was news that was heralded by the Real Estate Institute of Australia’s (REIA) new president, Hayden Groves, who described the predicted lift – from 1.5 per cent economic growth in 2020-21 to 3.75 per cent in 2021-22 – as a major boost for the economy.
“A drop in the unemployment rate to 4.5 per cent in 2021-22 and 4.25 per cent in the following year, wages growth of 2.25 per cent and 2.75 per cent in those two years and then accelerating along with a CPI within the RBA’s target, [taken together] will be a positive for the property sector,” he said.
“The outlook for interest rates is benign under this scenario and with signs that prices are stabilising, buyers and sellers should have confidence in the economy and the property sector,” he added.
Mr Groves cited the evidence that new listing inquiries were increasing as a sign that that the market next year would return to long-term average levels, ultimately moderating price rises and easing the decline in affordability.
The Property Council agreed that the government’s latest MYEFO data indicated stability for the property industry, noting that as one of the nation’s biggest employment sectors, it was well-placed to support a rebound in employment.
The council also welcomed the federal government’s plan to bring back normal levels of net overseas migration a year earlier than previously forecast and then to run migration at “catch up” levels for the coming two years.
“This will be a vital ingredient in supporting economic recovery and addressing crucial skills gaps,” the Property Council commented.
But some noted that even with these positive indicators forecasting strength and stability for the property market in months ahead, the government still needs to take proactive action on the issue of housing affordability.
Mr Groves called for a long-term plan for addressing the supply issue, while the Everybody’s Home campaign is arguing that the latest MYEFO skirted housing affordability concerns.
“House prices and rents across the country continue to skyrocket and it’s clear a lack of supply of affordable housing is driving this growth,” the campaign’s national spokesperson, Kate Colvin, said.
“The Morrison government has chosen to ignore housing affordability concerns, which are at their highest-ever level, and months of warnings about the impact of soaring house prices and rents across Australia,” she added.
The organisation is calling for increased spending on social and affordable housing to mitigate the fact that home prices and rents keep rising, warning of a looming homelessness crisis if the issue is not addressed.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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