An unprecedented influx of migrants into is putting upward pressure on inflation that could lead to yet another interest rate hike by ‘s central bank.
HSBC chief economist Paul Bloxham, who formerly worked at the Reserve Bank, said new arrivals in were pushing up total consumer spending and contributing to an already competitive rental market.
‘Per capita household consumption has been falling and is evidence that monetary tightening is working … [but] with many more people in the economy, there are also many more consumers,’ he told The n Financial Review this week.
‘s interest rate is currently at 4.10 per cent following 12 interest rate hikes since May 2022 but has been steady for the most recent four RBA monthly meetings.
However, in the year to September about half a million new migrants moved to , the highest number in a 12 month period on record.
Mr Bloxham said it was his forecast that partly due to this increased migration the RBA would once again raise the cash rate on Melbourne Cup day by, in his view, 25 basis points.
Radio host Ben Fordham said the influx of migrants filling jobs and spending money was a ‘smokescreen’ that average ns had more money in their pockets to spend while they are actually battling with cost-of-living and mortgage pressures.
‘We are being crippled by high migration. The record number of high overseas arrivals is heaping pressure on the economy.
‘Half a million people have packed up their lives and now call home.
‘It’s a rate we have never seen before in the history of this country.
‘Allowing half a million people to move to creates a smokescreen. Migrants move to and spend money.
‘It creates an illusion our finances are in better shape, which prompts the Reserve Bank to move on interest rates,’ the 2GB host said.
Economists say record immigration in the last 12 months is pushing up inflation and contributing to the competitive rental market (pictured: file image of a Sydney auction)
Fordham said the Albanese government must turn it’s attention to the housing market and how the country’s 2.2 per cent population growth – one of the highest in the world – is affecting it.
‘The impact on housing is enormous, our rental vacancies are at 1.1 per cent across and the cost of renting is through the roof.’
‘Young people are being priced out of the market and if you can afford a home, then we’re spending record amounts on loan repayments.
‘The gap between wages and property costs has never been wider. It has tripled since the 1980s. And as we welcome more people, more pressure is applied.
He highlighted that when demand for housing outstrips supply, it it is inevitable that the price of housing will rise with hundreds of thousands of migrants looking for a place to live.
‘The treasurer Jim Chalmers needs to face a few facts. In the short term we can’t build our way out of trouble – but we can slow the overseas arrivals. Come on Jim, show some backbone,’ Mr Fordham said.
Economists from the Big Four n banks are all forecasting a November 7 interest rate rise.
One Nation leader Pauline Hanson has also taken aim at the government.
‘The Albanese Labor Government’s handling of immigration has been shameful.’ Senator Hanson wrote to X, formerly Twitter.
‘They could easily fix it but they choose not to. Aussies are hurting and it’s their fault.’
There has been a jump in real estate auctions along the east coast as sellers try to offload properties ahead of the anticipated interest rate hike on Melbourne Cup Day.
Some 2883 properties were listed for auction on Saturday and an additional 639 are set to go under the hammer in the next few days, which would make it the busiest period since April 2022, according to CoreLogic.
That’s 80 per cent spike on this period last year but still below record auction volumes in late 2021.
A flood of houses hit the market in recent days ahead of an expected interest rate rise that will further increase mortgage bills
Melbourne is hosting the most with 1746 properties listed, followed by Sydney with 1179, Brisbane 241 and Canberra 165.
Auctions in Adelaide are up marginally with 174 scheduled, while Perth has fewer than last week and just three properties are set to be auctioned in Tasmania.
It comes as mortgage owners face what could be the first interest rate hike since June.
Inflation data released this week showed consumer prices tracked by the n Bureau of Statistics rose 1.2 per cent over the three months to September and annual inflation grew 5.4 per cent.
On Thursday, Reserve Bank Governor Michele Bullock revealed the consumer price index results came in a little higher than forecast and service prices remained higher than she was comfortable with.
The Reserve Bank next meets on November 7, Melbourne Cup Day, and Ms Bullock has made it clear the board will not hesitate to act on interest rates if it deems it necessary.
RBA governor Michelle Bullock has said she will not hesitate to increase interest rates
Real Estate Institute of President Hayden Groves said some vendors had dragged auctions forward to this weekend to beat the expected rate rise next Tuesday after months on hold.
‘Sellers will be trying to beat that because we do see needs shift once we do start to see rates rise again,’ Mr Groves told AAP.
‘People think that perhaps that might be the beginning of the end of a buoyant market.’
He said it was still a seller’s market in most jurisdictions with family homes in highest demand.
‘People will be certainly thinking of selling now and taking profits, perhaps downsizing,’ he added.
Clearance rates have hovered around 65 per cent since July but Mr Groves said he would not be surprised if that jumped to 70 per cent over the weekend.
Earlier in the week, Ms Bullock said most n households and businesses had been coping pretty well through worsening economic conditions and higher interest rates, however pressures had not been felt evenly.
The RBA estimates roughly five per cent of all variable-rate borrowers are paying more for essentials and housing than they are bringing in.
This increased to one quarter of highly leveraged borrowers with loans at least four times their income.
Central bank research also showed while tenants have been under pressure, spare cash flow that group’s overall cash flow jumped as higher cost of living and rising rest had been offset by higher incomes linked to the tighter labour market.