Latest news with #LeithvanOnselen
Daily Mail
21-05-2025
- Business
- Daily Mail
BREAKING NEWS Did high immigration WIN Anthony Albanese the election? Shocking claim emerges that Labor is 'importing future voters'
An economist has linked Australia's population growth with a surge in support for Labor and described how the party is 'importing future voters' with its high immigration policy. Australia hit a net overseas migration record of 528,000 in 2022-23, followed by 435,000 in 2023-24. The Albanese government has forecast the rate for 2024-2025 to fall to 260,000 and then 225,000 the year after, although budget figures have consistently underestimated net migration numbers in the past. The largest source of permanent migrants to Australia in 2023-24 was India, followed by China, the Philippines and Nepal. Leith van Onselen, who is chief economist at MacroBusiness and previously worked at the Australian Treasury, has argued that the growing Indian community in Australia is a boon for Anthony Albanese. Asked if there was any evidence that population growth had led to more support for the Labor government, Leith van Onselen told 2GB's Luke Grant, 'unfortunately there is'. 'There was a post-2022 election survey done by Carnegie and Dowman, and that showed that 58 per cent of the Indian community voted for Labor versus 34 per cent for the Coalition,' Mr van Onselen said. 'And the Indian community is now our largest immigration source. 'It seems that that community votes overwhelmingly for Labor.' After this month's election, social media was flooded with videos of Indian students and migration agents 'celebrating wildly Labor's election victory, because they know that the Albanese government's a bit of a soft touch on immigration'. 'And obviously with Labor being re-elected, it lessens the chance of immigration cuts, it means more international students. So that community was obviously celebrating,' Mr van Onselen said. 'Labor is incentivised to maintain a high immigration policy because it's effectively importing future voters.' He said it showed the Coalition had 'shot themselves in the foot' because much of the immigration to Australia over the past 20 years had happened under Coalition governments. 'They effectively imported a whole bunch of people who were then more likely to vote for Labor... They probably did it inadvertently.' Peter Dutton made a series of policy backflips on immigration during the Coalition's failed election campaign. Eventually, he vowed to cut net migration by 100,000 people to 160,000, based on the Albanese government's forecast of 260,000. Mr van Onselen said monthly arrivals and departures data from the Australian Bureau of Statistics showed migration was trending up again. About 188,000 permanent and long-term arrivals landed in Australia in the first quarter of 2025, he said. 'It looked like migration was coming down at the end of last year - it now looks like it's picked back up again. 'The whole housing equation in Australia just does not add up. We're fire-hosing in more and more people every year, we never have been able to build enough homes, and the government seems to wonder why we have this perpetual crisis. 'And it's primarily been driven by the federal government.'
Daily Mail
19-05-2025
- Business
- Daily Mail
Post-election challenges emerge in Australia following Albo's victory
By An economist has warned there's 'no chance' Labor will reach its goal of building 1.2million homes in five years, amid soaring construction costs and unfettered immigration. Australia has a record level of construction company insolvencies in 2025, a 24 per cent increase over last year's rate. 'We've lost all these builders at the same time as the government wants to build more homes and there just isn't the capacity there,' Leith van Onselen told ABC Radio Brisbane. 'It's just too expensive to build housing in Australia at the moment, for a variety of reasons, and that just means that less housing is going to be built at the same time the government has the throttle on immigration.' Mr van Onselen (pictured), who is chief economist at MacroBusiness who previously worked at the Australian Treasury, said although house prices were still increasing, builders were doing it tough. 'As a result, builders are caught between a rock and a hard place whereby they can't deliver stock at a profitable level, and that has created a major handbrake on housing construction. We're still seeing lots of builders going under, and they're struggling to make a profit at the moment, which just means this housing construction target from the federal government is completely unrealistic.' Mr van Onselen said there was 'absolutely no chance' the Albanese government would reach its housing target within the next five years. The policy required 240,000 homes to be delivered every single year for five years. Australia's record year for construction was 2017 when about 223,000 homes were built. 'Our very best year in history was 14 per cent less than the Albanese government's target. We just don't have the labour to build these homes, it's too expensive to build these homes, and also land prices are just simply too high. When you couple excessively high land costs, with excessively high costs to put the structure on top of that land, it's just simply too expensive to build housing in Australia.' Mr van Onselen pointed to an Infrastructure Australia report from 2019 that warned an extra $40billion of investment a year for five years was needed to keep up with population growth. 'If you fast-forward from there to the current time, Australia has added 2.2million people since 2019... That is roughly the equivalent of adding a Perth. '...If the situation was dire in 2019, as Infrastructure Australia said, and we've added 2.2million people since that time through very high immigration, and we don't have enough workers to build the infrastructure, why are we persisting with this incredibly high immigration program when we just can't build the infrastructure for it?' Want more stories like this from the Daily Mail? Hit the follow button above for more of the news you need.
Daily Mail
19-05-2025
- Business
- Daily Mail
Economist takes Albo to task after election win as he points out a major problem with Labor's plan to build 1.2million homes
An economist has warned there's 'no chance' Labor will reach its goal of building 1.2million homes in five years, amid soaring construction costs and unfettered immigration. Australia has a record level of construction company insolvencies in 2025, a 24 per cent increase over last year's rate. 'We've lost all these builders at the same time as the government wants to build more homes and there just isn't the capacity there,' Leith van Onselen told ABC Radio Brisbane. 'It's just too expensive to build housing in Australia at the moment, for a variety of reasons, and that just means that less housing is going to be built at the same time the government has the throttle on immigration.' Mr van Onselen, who is chief economist at MacroBusiness who previously worked at the Australian Treasury, said although house prices were still increasing, builders were doing it tough. 'As a result, builders are caught between a rock and a hard place whereby they can't deliver stock at a profitable level, and that has created a major handbrake on housing construction. 'We're still seeing lots of builders going under, and they're struggling to make a profit at the moment, which just means this housing construction target from the federal government is completely unrealistic.' Mr van Onselen said there was 'absolutely no chance' the Albanese government would reach its housing target within the next five years. The policy required 240,000 homes to be delivered every single year for five years. Australia's record year for construction was 2017 when about 223,000 homes were built. 'Our very best year in history was 14 per cent less than the Albanese government's target. 'We just don't have the labour to build these homes, it's too expensive to build these homes, and also land prices are just simply too high. 'When you couple excessively high land costs, with excessively high costs to put the structure on top of that land, it's just simply too expensive to build housing in Australia.' Apartments weren't the solution either, because they were significantly more expensive than detached houses, he said. Infrastructure spending was also inadequate as migrants continued to flood into Australia. Mr van Onselen pointed to an Infrastructure Australia report from 2019 that warned an extra $40billion of investment a year for five years was needed to keep up with population growth. 'If you fast-forward from there to the current time, Australia has added 2.2million people since 2019... That is roughly the equivalent of adding a Perth. '...If the situation was dire in 2019, as Infrastructure Australia said, and we've added 2.2million people since that time through very high immigration, and we don't have enough workers to build the infrastructure, why are we persisting with this incredibly high immigration program when we just can't build the infrastructure for it?'
Daily Mail
19-05-2025
- Business
- Daily Mail
The astonishing collapse of Australian wages - and why your pay won't recover anytime soon
Australian workers are expected to continue struggling financially until 2040 even though wage rises are now outpacing inflation - as mortgage repayments squeeze borrowers. Treasurer Jim Chalmers and new Employment Minister Amanda Rishworth last week hailed the strongest real wages growth in five years. 'Under Labor, more Australians are working, earning more and keeping more of what they earn,' they said. 'The government's policies are driving strong and sustainable wage growth for workers. 'This is the strongest rate of annual real wage growth in five years.' But MacroBusiness chief economist Leith van Onselen said Australian workers were still going backwards financially, despite enjoying real wage increases since the end of 2023, where pay levels have risen at a faster pace than inflation. 'It's a pretty bad situation there whether you adjust wages for inflation or the cost of living of employees,' he told 2GB. 'The disturbing thing about this is that real wages in Australia aren't actually expected to pick up for a long, long time; aren't expected to recover to what they were at their peak - for a very long time, potentially 2040.' His forecasts for declining living standards until 2040 were based on Reserve Bank predictions for the labour market and inflation. 'Real wages may not recover until 2040 which is absolutely extraordinary when you think about it. 'This post-pandemic cost-of-living crisis is likely to persist for many years.' Overall wages rose by 3.4 per cent in the year to March, which was well above the headline inflation rate of 2.4 per cent. This meant a real wage increase of one per cent. 'It sounds decent on the face of it but the problem with it is that when you adjust for inflation, Australia's real wages are still tracking 6.1 per cent below their mid-2020 peak,' Mr van Onselen said. Another Australian Bureau of Statistics measure showed employee living costs climbing by 3.4 per cent in the year to March - which was the same as the wage price index. This effectively meant Australian workers paying off a mortgage or battling high rents had no increase in the wages, adjusted for living costs. 'It's effectively the inflation rate that adjusts for other things that workers have to pay,' he said. 'So, things like mortgage payments, stuff like that. 'When you adjust the wage growth against the cost-of-living index for workers, what it shows is that wages after adjusting for the cost of living, are tracking 10.2 per cent below the mid-2020 peak.' During the June quarter of 2020, covering the first Covid lockdowns, real wages were growing by 2.1 per cent. This occurred as wages rose by 1.8 per cent as prices fell by an annual pace of 0.3 per cent. Employee living costs were then falling by 2.1 per cent, which meant workers were getting a 3.9 per cent increase in wages, adjusted for living costs. The prolonged lockdowns of 2021 in Sydney and Melbourne and Russia's Ukraine invasion in 2022 saw inflation soar to levels last seen in 1990. Australians were suffering real wage cuts from June 2021 to December 2023 as pay increases lagged well behind inflation. While wages have outpaced inflation for more than a year now, the buying power of pay is back to where it was in late 2011. 'Which is quite extraordinary - that suggests that Australians have experienced no real wage gain in more than 13 years,' Mr van Onselen said. 'The purchasing power of Australia's wages is back to where it was 13 years ago. 'It's actually worse than that.' This factors in the weak wages growth of the 2010s before workers suffered more than two years of real wage cuts before the Reserve Bank of Australia raised interest rates 13 times in 2022 and 2023. The cost-of-living crisis was expected to persist even as the RBA cut rates again on Tuesday, with inflation back within its two to three per cent target. 'When inflation is coming down, it doesn't mean that prices are falling, it just means they're not rising as quickly as they were,' he said.
News.com.au
06-05-2025
- Business
- News.com.au
Experts divided over ‘risky' new mortgage that doesn't pay anything off a home loan
A major financial institution has unveiled a 'bold' new mortgage product with a significant difference – borrowers won't actually pay anything off their home. Instead, AMP's new offering is a 10-year, interest-only loan, which it said provides customers with 'more choice, long-term financial flexibility and greater control over their cashflow'. The big quirk with the loan is that there's no midterm assessment point, where a lender might ordinarily check to see the property's value and the borrower's financial standing. And where interest-only loans are usually the domain of investors, AMP is marketing to owner-occupiers. 'First and foremost, I strongly disagree with the offering for homebuyers, especially first home buyers,' Andrew Mirams, managing director of brokerage Intuitive Finance, said. 'If they can't afford a 30-year mortgage, then the servicing for this loan is over 20 years and would reduce, not boost, borrowing power for these applications.' Economist and former Treasury adviser Leith van Onselen, chief economist at MB Fund and MB Super and co-founder of MacroBusiness, isn't a fan at all. 'This type of mortgage product will increase borrowing capacity, household debt and ultimately home prices,' Mr van Onselen said. 'It will pour more mortgage fuel on the housing bonfire and is ultimately retrograde.' Australia already has one of the most expensive housing markets in the world in terms of prices relatively to household incomes and the broader economy, he said. 'Demand-side mortgage measures like these will merely drive more financial capital into housing, inflating home values further.' Across the country, home prices are already on the rise once again after the Reserve Bank's first interest rate cut in years dramatically boosted would-be buyers' confidence. Social media users were more scathing, with AMP's post on X announcing the product flooded with criticism. 'I am waiting for 'no income, no job' loans,' one wrote. 'Ahem, let me give you a hand and say the quiet part out loud,' another said. 'If you're paying an interest-only loan, you don't build any equity through your regular loan payments, since you're only covering the interest and not reducing the principal.' In reference to the Global Financial Crisis, sparked by the collapse of subprime mortgages, one said: 'How does this not end up like '08?' And echoing countless pointing out the same, another quipped: 'Well done, gents. Why don't you just buy the house for them and charge them rent?' Most experts spoke to welcomed innovation in the mortgage market, but many warned AMP's product should be carefully considered. Graham Cooke, head of consumer research at financial comparison website said the product is a 'bold' offering but warned it's not for everyone. 'Because no principal is repaid for 10 years, customers should expect higher total interest charges and factor this into their long-term budget,' Mr Cooke said. 'If you have this type of loan, you never actually pay off any of the money you borrowed – you are betting on property prices continuing to rise in one of the highest price-to-income markets in the world.' Michelle Cull, an associate professor of accounting and financial planning at Western Sydney University's School of Business, said it would allow young borrowers just starting their property journey and cash poor older Australians to free up cashflow. 'On the plus side, the interest rate on offer is very competitive,' Dr Cull said. 'AMP also has strict loan-to-value ratio requirements in place for owner-occupiers in order to manage the risk of market fluctuation.' But the product does come with some unavoidable risks, she cautioned. 'For example, if no principal is repaid during the 10-year, interest-only period, then there will be a significantly higher amount of interest paid over the life of the loan. 'Further, at the end of the 10-year interest only loan period, borrowers will have to reassess their situation, which may be drastically different and may require substantially higher repayments, which could cause financial stress.' Youngers borrowers could be given a false sense of security by shelling out for repayments each month without actually paying down their mortgage, she added. 'They will still hold significant debt at the end of the interest-only period. While it may be helpful in managing cashflow in the short-term for these borrowers, it may place them in a worse position in the longer-term.' A decade is a long time to not pay down a single cent of your home loan balance, Compare the Market's economic director David Koch pointed out. 'And when you only tackle the interest, you'll end up paying more in the long run,' Mr Koch said. The product represents good business for AMP, given the average loan term in Australia has dropped significantly over the past few years. According to the last Census, 66 per cent of Australians are homeowners and 45 per cent of those have a mortgage. That's millions of potential customers for banks to compete for via attractive home loan product offerings. Research indicates the typical life of a loan is about three years, which means a huge number of homeowners refinance regularly, shifting banks to find a better deal. Attracting those borrowers is only part of the deal, given interest-only products with a pre-committed term carry heavy penalties for early exits. Richard Holden, a professor of economics at UNSW's Business School, expects the product offering to be attractive to borrowers. 'AMP will need to be very careful about their underwriting standards given the risks involved, but that's their core competency,' Professor Holden said. 'I would be concerned if other copies it and it became a significant share of lending, but I think that's unlikely.' An interest-only loan typically stretches for five years at a maximum, before reverting back to principal and interest, Property and real estate expert Adrian Lee, an associate professor at Deakin University, said. 'It may then be rolled over for another five years with a reassessment [by the bank],' Dr Lee said. 'This AMP product seems to assess initially and grant it for 10 years instead of five years.' It won't suit all borrowers and its worth depends on one's financial discipline as well as investment needs. 'For example, principal and interest is much easier financially as it forces disciplined savings, because some principal must be paid off each time. Interest only is up to the borrower how much principal is repaid or offset after interest is paid.' Finance expert Andrew Grant, an associate professor at the University of Sydney Business School, welcomed the sign of 'innovation in the mortgage market. 'And no doubt borrowers value certainty over their repayments, which this helps with,' Dr Grant said. 'Now, if it is the case that we're on a downward rate cycle, then locking the rates for the longer term might be a little costly. If variable rates head downwards, people might regret fixing for a longer-term. 'But some borrowers will have learned that the shock of a rate hike can be quite painful, like the end of low fixed rates, then jumping three per cent or more. So, the timing of the offering seems interesting.' In the past, interest-only loans have tended to be the domain of investors who can claim that component of their repayments as a tax deduction. Sometimes, people experiencing periods of financial distress might opt to switch to interest-only for a period of time to boost their cashflow, Mr Koch pointed out. 'Usually those borrowers will try to get back onto a principal and interest loan as soon as they can afford to do so,' he said. 'Investors are likely to be the big winners here. They often like interest-only loans because it helps them maximise the tax-deductible interest while reducing repayments. 'It's a popular strategy for investors who plan to sell after the interest-only period ends, assuming that the asset has grown in value.' But even for investors, Mr Cooke warned the risks are important to keep in mind. 'Investors and rent-vestors gain extra cashflow to support further property acquisitions or reinvestment strategies, however they open themselves up to the risk of sinking quickly into negative equity if the property market crashes,' he said. 'This risk is exacerbated for investors with multiple properties, who were the first casualties in many EU countries during the GFC.' AMP has also spruiked the benefits for retirees, with the company's director of lending and everyday banking Michael Christofides saying many overspend in the early years post-work for fear of outliving their savings. 'For some retirees, the reality is that increasing equity in their property offers no felt benefit,' Mr Christofides said. 'Instead, they could use additional cashflow to enhance their quality of life. 'Our new interest-only loan is a simple solution designed to provide this optionality and financial flexibility for retirees.' Mr Koch said anyone in that position should seek advice from a financial adviser to decide if it's a good strategy. Regardless of the loan product, all borrowers have difference financial circumstances and should weigh up the pros and cons for themselves, Dr Cull said. 'Borrowers should consider all options available to them and seek independent financial advice to ensure they are making decisions that are in their best interests.'
