A sharp drop in household size, as people moved out of share houses or their parents’ homes, helped offset the effect of the collapse in immigration on the Australian property market, the Reserve Bank believes. .
In a speech on the housing market this morning, the bank’s deputy governor, Luci Ellis, also noted that government programs, including the federal Coalition’s HomeBuilder subsidy, helped push up prices, while also warning that rents in Sydney and Melbourne may increase faster than expected.
House prices soared at their fastest pace in more than 30 years during the pandemic thanks to government support programs and low official interest rates despite stagnant population growth. House values are now starting to fall, while the RBA last month raised interest rates for the first time since 2010.
Ellis said that while Australia’s population had been permanently reduced due to the drop in migration, this had not affected the housing market.
This was due to the size of Australian households shrinking during the pandemic as people took the opportunity to move into their own home.
“Spurred by the experience of lockdown and self-isolation, many people understandably wanted a little more space and maybe a garden. Some also needed space where they could work, or maybe just fewer roommates to share that space with,” he said.
“While some young adults moved back in with their parents at the start of the pandemic, that change has since been reversed. On the question of who you’d rather be in lockdown with, at least some Australians have voted with their removals van, moving out of their shared house and into
with your partner.”
Ellis said that although the population was smaller, the country’s housing stock had continued to grow.
She said housing supply has been ahead of demand for “several years.”