REA locust: “Cutting immigration won’t help housing”

By Leith van Onselen

REA chief economist, Nerida Conisbee, has penned another self-serving article claiming that “cutting immigration won’t help housing”:

There’s no doubt that the more people there are living in Sydney and Melbourne, the higher property prices go. This has led to some commentary about migration levels needing to be cut so that we pay less for homes.

But it isn’t that simple.

For a start, housing is not unaffordable everywhere in Australia…

Head to Adelaide and housing is still very reasonably priced. Some regional areas have very low-cost housing. The main driver of this differential is jobs.

Sydney and Melbourne are seeing strong rises in house prices because people are moving there for jobs…

At a city level, jobs growth drives migration, which in turn drives up house prices if there isn’t enough housing to accommodate everyone. The main reason that Melbourne has remained so much more affordable than Sydney is supply…

At a country level, migration brings a large number of benefits to Australia. Migrants pay taxes and support our ageing population. They take on jobs that locals are not so keen on and they spend money that supports business growth. Cut migration and it will impact our standard of living…

What is the solution to Sydney and Melbourne’s unaffordable house prices? One way is to build more houses where the jobs are. Increasing housing supply works — you only have to look at Melbourne apartment prices to see that. The second is that we could look to move the jobs. This is far more difficult…

Cutting migration is not the simple solution it at first seems and may not lead to lower house prices.

The unintended impact could be stifling economic growth and the standard of living that many enjoy.

Conisbee’s arguments have more holes than a chunk of Swiss cheese.

First, the primary reason why house prices are rising (and expensive) in Sydney and Melbourne, but are stable and cheaper elsewhere:

Is because these destinations are the magnets for overseas migrants:

The charts speak for themselves.

Second, the claim that people are going to Sydney and Melbourne because of jobs is ridiculous.

The primary factor driving this population growth is the federal government’s mass immigration ‘Big Australia’ policy, which has committed to a turbo-charged permanent migrant intake of around 200,000 people a year:

We also know from the Census that migrants tend to settle in Sydney and Melbourne, irrespective of economic conditions, because that is where their diaspora live.

In fact, locals are migrating out of Sydney, pushed-out by the flood of migrants:

Conisbee’s argument that the solution to Sydney’s and Melbourne’s housing woes is to simply increase supply is laughable. Both cities have just experienced their biggest ever dwelling construction booms (mostly shoebox apartments):

And yet neither city has kept pace with the rampant immigration-fueled population growth:

Accordingly, both cities have experienced rising dwelling prices and rents.

Conisbee’s argument that “migration brings a large number of benefits to Australia” because “migrants pay taxes and support our ageing population”, and that cutting migration “will impact our standard of living” is equally nonsensical because it does not factor in the substantial costs associated with immigration.

Is Conisbee seriously trying to argue that migrants don’t age, and don’t need infrastructure, hospitals, schools, transport, etc, all of which are completely overwhelmed in Sydney and Melbourne? Is she also trying to argue that migrants don’t undercut wages, just take on jobs Australian’s aren’t keen on?

All of the extra infrastructure and services required by migrants costs a helluva lot and is paid for, to a large extent, by the incumbent population.

In fact, Dr Jane O’Sullivan has estimated that the infrastructure burden of new migrants is more than $100,000 per head, whereas the Grattan Institute has estimated that the blowout in state government debt has been caused primarily by infrastructure investment related to population growth:

A fiscal burden of more than $100,000 per additional person, or tens of billions of dollars per year, is a huge cost for the government to omit from its balance sheet of costs and benefits of population growth. The cost single-handedly accounts for all increase in government debt since the escalation of population growth from 2004. The Grattan Institute reported “unprecedented infrastructure spending by states and territories is largely responsible for a $106 billion decline in their finances since 2006,” and “after a threefold increase in capital spending over the last 10 years, states are paying 3 per cent more of their revenues in interest and depreciation.”

These figures are based on what has actually been spent. It is evident that expenditure has not been enough, with congestion mounting in transport systems, hospitals, schools, prisons, housing and community facilities.

That’s right, our governments have massively increased expenditure and taken on more debt, but have still failed dismally to keep up with rampant immigration-fueled population growth. Way to improve living standards, hey Nerida?

Finally, the ultimate damnation of Consibee’s claim that “cutting immigration won’t help housing” comes from the NSW Government’s own population projections, which shows that Sydney’s population will balloon by a massive 1.74 million people (87,000 people a year) over the next 20 years, with almost all of this growth (1.53 million or 76,500 people a year) coming from net overseas migration:

Does Consibee seriously believe that Sydney’s housing and infrastructure woes would not be massively improved if the city’s population grew by only 210,000 (under zero net overseas migration) versus 1.74 million (under the current mass immigration settings)?

About the only thing I can say that is positive about Consibee’s contribution is that The Australian’s readers have taken her to task in the comments section. They are not stupid and do not buy her self-serving arguments.

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  1. At a country level, migration brings a large number of benefits to Australia. Migrants pay taxes and support our ageing population. They take on jobs that locals are not so keen on and they spend money that supports business growth. Cut migration and it will impact our standard of living…

    What a furphy if you ask me, in my area there is lot of rich Chinese dudes buying housing as a first step in migration which drives prices up. You can’t compete with these Chinese millionaires and are forced further out (so longer commutes to your job).

    Then there is the students who buy houses via their parents wealth here, how much tax do you think they are paying as students? Then when they sell is it capital gains tax free?

    Some are repeating the benefits of our society with very little contribution (historically) while others who have grown up here, paid tax their whole lives and contributed to the social fabric of Australia (mainly Young Australian’s) are getting screwed harder and harder.

    • It’s been well-established in Vancouver that their tax base is being eroded as the rich migrants don’t actually bring their money-generating business with them. The occasional sales tax on luxury cars fails to offset the use of socialised healthcare and other services by their families – a system that they will never pay into. It also fails to offset the inevitable massed flight of previous tax-paying native residents to other places with a more reasonable cost of living.

      Don’t bring this up in polite conversation though, that would be racialist.

      • Yep that’s basically the same point I was making, they come, take all the good bits and pay no dividend back to society.

  2. Leith, what do you reckon actually happens at the author’s end? Do you reckon they actually truly believe this stuff like for instance in the way that Abbott believes climate science is a fraud OR do you reckon they consciously know they are expected to pen a defense of immigration because they recognise their employer expects them to? The 2nd scenario effectively being a conspiracy to defraud (ideas and opinions as against financially).
    Genuinely interested on thoughts.

    • Travis

      I have been a market analyst for close to 30 years, one of the remaining of about 25 from the mid-1980s. I am a stay up not a start up and it is fcuking hard to tell the FIRE industry/developers anything negative. To be truly independent and state things are they really are is well a business death sentence. My bank account can testify to that and I reckon MB is the same.

      Now assuming you know what you are doing, you can make the statistics say anything. But the current crop of RE commentators firstly believe what they are told; tow the company line; believe their own press and haven’t experienced hardship (i.e. a recession).

      Also to even out the tone here there is enormous bullying in the property industry – to be yelled at, called an F and C (I am not exaggerating) and to get hate mail – real vicious stuff – is common place. How Hollywood depicts most developers isn’t off the mark.

      Some RE commentators would be under constant watch and if they don’t pull the line – sacked. The RE advertisers rule the roost, if they don’t see stuff that supports their spruik they start demanding that it does. I know, that’s why I got sacked as a Murdoch press property columnist.

      Also the FIRE/development industry is becoming, well dumb and dumber – I describe it as ‘recently and primacy’ – what counts is the last thing or the loudest thing that was heard, read or seen.

      And once they have made up their mind, well that’s that.

      Finally fact or fiction is irrelevant. I often ask, argue and debate ‘who can that be right?’ to be told something which doesn’t pass the pub test or simply told to get stuffed – “your too old to understand what’s going on these days” was just said to me yesterday.

      Thanks for the ask Travis, I feel better now.



      • cheers Michael, keep up the good work. I know what you mean about the echo chamber, even one that exists on the ground on individual projects. I’ve got heaps of relatives and mates who fill various positions in this conga line of suckholes and it amuses me when I give them my two cents worth on the entire industry.
        Their collective response, of late, is at the fighting part of the “ignore then ridicule then fight then you win” analogy. Can’t be too long till the win arrives at our respective door steps.

      • darklydrawlMEMBER

        “and haven’t experienced hardship (i.e. a recession)”…

        THIS!! It makes me very nervous that the kids running the risk models in all these places have no freak’n idea of what real pain is. They’ll put -4% drop into their property models thinking that is pretty darn harsh and go “oh, ok – no problem”. Try -55% kids and then get back to me with your thoughts.

        Their idea of a downturn is bringing in your own sandwiches for lunch 3 times a week and cutting back on the $5 espressos at morning tea. They truly have no idea of what is coming and will be like rabbits frozen in the headlights when it all goes to sh!t.

  3. Below is what I think – and you might ask, given I was once a columnist for a Murdoch rag and despite MB having a go at me at the time (search my name on this site) as having sold out – which frankly pissed me off at the time – I was employed by the then editor (who got sacked too) to ‘shine some sunshine on this real estate BS” – in the end I got fired, by letter sent to the wrong address and signed by some office junior – good riddance I said

    Having now babbled for way too long – almost all of the press is a media release/paid content – it used to inform, these days it just sells

    • Brisbane is a curious market though – unemployment rates are not materially off Sydney and Melbourne levels and population growth has been roughly (proportionately) the same as Sydney’s, yet prices have been mostly flat (in real terms) for five or more years. Lower rates have therefore meant housing is more affordable now than what it was, which is certainly a good thing. To my mind, the missing link is market momentum. There has been nothing to light the market up, so buyers are not fearing that they will miss out by biding their time. The other factor I think is supply related; buyers are generally spoilt for choice and are not as “locked out” of a range of locations as is the case in Sydney.

      • Stitches


        Real measures of unemployment – Roy Morgan not ABS – show that Brisbane is way behind Syd and Mel.

        Housing stress is highest in Brisbane – at 20%. See here

        And for many Qld is ‘poverty is nicer in a warmer climate’!

        True no momentum in Brisbane. Why? Little overseas buying. That is the SOLE reason for Sydney and Melbourne price growth. There is plenty of housing supply in both cities. Both in the form of new housing and spare rooms/unoccupied property. True it isn’t all in Many or Bondi, but it is there. And sadly a lot of the new stock is ‘locked up’ by overseas buyers. Also granny flats aren’t measured by the ABS for example. Some 20,000 granny flats are built across Sydney each year.

        There will not be a migration north to Brisbane this cycle – few full-time jobs; no family connections (parents or kids live elsewhere); and no wage growth-little chance of climbing the corporate ladder (it takes a resources boom to do that and/or a collapse of the southern economies) and having been a resident in Brisbane for nearly 3 decades (I am a Sydney import) let’s just say that the place is a cultural vacuum. The Gold Coast deserves The Logics (what a perfect match) and State of Origin sums up Qld to a tee.

        Too harsh? Well go ask peeps in Sydney and Melbourne what they think of Brisbane. And if they will move. We have recently as part of a consultancy job. Let’s just say that the Qld developer who commissioned the work was shocked at the results.

        And we can fix this is 5 minutes. Limit overseas migration to a sustainable target. Force them to regional Australia – by stick or carrot. And No Passport No Buy regardless of property status – new or established. We should only create dwellings or sell them to citizens.

        What we have been doing has teeth! And it will bite us like many yet fully appreciate.

        The next federal election will be fought over the usual BS. Me thinks there will be a change. But the next election after that – during the next term Australia (for the life of me) cannot escape a recession and a hard one – will be all about social justice, and housing affordability will be a major factor. The rise of One Nation and the like is on the cards.

        I am not passing judgement, too old/tired/disinterested to care. It is just the path I think we are on.



      • Yeah, too harsh I reckon! I’m a Sydney import as well (almost two decades) and a regular visitor to Sydney and Melbourne, and I can’t see any differences in the “cultural” precincts of Brisbane versus Sydney. The company I work for with a Sydney Head Office is full of people currently looking to shift to SE Qld, mostly because they can see their future ahead in Sydney i.e. 50 years old and still paying a 3 bedroom outer suburban house off, grinding through two hours of traffic a day. Totally agree there is a perception that Brisbane is culturally “behind”, but I think that view is outdated and partly borne out of the attitude that many get from living in Sydney; “I live in the largest city therefore I must be better”, the barbecue stories about house prices, the bragging (parading as mock horror) at high prices, that type of thing, which ironically becomes self fulfilling. The housing stress data you mention I think relates to Queensland as a whole not Brisbane and would be picking up the tail end of the mining fallout in places like Mackay?

      • Brisbane is a great place, please stay away. Foreigners won’t buy here unless they miss the hot weather of home – few – or their kids are getting a valuable education and Sydney/Melb cost too much- that trick is up too, uni in China, etc better, rapidly fewer. Few corporate executives or head offices caps income growth esp. post mining boom. This place is a middle class utopia if you can find a job. Syd/Melb siders talk but lack of connections/family means it is just that plus a fear that if you fall behind you may lose the option to come back. Recent building is pure speculative overflow, from down south. Government will be the last hope, universal basic income in the form of public sector employment but who will pay the taxes?

    • @Michael
      Thanks for you honesty & integrity.
      I imagine its difficult to retain either as a journalist, commentator etc in current eco / political climate.
      You’re my echo chamber!

      • BG
        Echo some $ into my bank account please! Thx for your positive response. Now I need to get back to work. A few still employ me. I am know as The Drizzle: Throwing my wet blanket over everything. Well to misquote Tom Waits – “I am difficult to work with and have had no hits, and people think that is a bad thing”.

    • darklydrawlMEMBER

      I hear you. I used to work for broadcast TV news (commercial network) and it was grindingly depressing after a while. I quickly learned the real aim of commercial media is getting eyeballs to adverts. Everything is subservient to that.

  4. “Sydney and Melbourne are seeing strong rises in house prices because people are moving there for jobs…”

    Facts are there is net regional migration out of Sydney and it is accelerating. People are leaving in droves, being replaced by foreign immigrants. I expect the low unemployment rate is partly due to the exodus of available labour.

    • I’ve seen that looking at prices jumping up in other parts of NSW/QLD. The Sydney lot selling up and using the RE gains to jump into regional areas. I’ve been shocked, and a lot is said of Syd/Melb, but look at the prices up the east coast now…i don’t know what the stats say, but nothing seems reasonable now, that i’ve looked at.

      People might be able to advise me on this, but I remember looking at prices in Melb years ago via the auction results, and they then included Melb suburbs only, but lately when I’ve looked it’s regional as well. Is this right?

      • Newcastle prices are off the richter scale, $1M for modest abodes.. I was looking for the last couple of years and prices have literally doubled and trebled in that time.

    • This meme that it is “only Sydney and Melbourne” is bullshit
      Sunshine Coast up 7.5%yoy
      Gold Coast up 7.9% yoy
      Hunter region up 8.1% yoy
      Hobart up 11.7% yoy
      North Coast NSW up 11.8% yoy
      South Coast NSW up 13.8% yoy
      Bellarine Peninsula up 15.7% yoy
      Canberra up 16.2% yoy
      Mornington Peninsula up 19.2% yoy …..etc

  5. She says Adelaide is affordable. How is affordable defined? Just because its lower priced than Melb/Syd doesn’t mean its affordable. Where are Adelaide prices v income v debt etc compared to prior periods?

  6. ““Cutting immigration won’t help housing””
    To be renamed ….
    ““Cutting immigration won’t help Nerida Conisbee”
    and filed with
    “Limiting NG to new-builds won’t help Nerida Conisbee”
    “Enforcing FIRB laws won’t help Nerida Conisbee”
    “Passing AMLCTF laws won’t help Nerida Conisbee”

  7. Immigration related and even more outrageous than hospital wait times–the queue for home care help for our seniors.

    We are worse than most could possibly imagine.

    “Providers, sector peaks and academics have expressed concern over the 89,000-long wait list for home care and urged the Federal Government to take further action to address the long-running problem.

    Data released by the Department of Health last week revealed there were just as many people in home care each year as on the national queue.

    Based on the 53,000 people currently without access to any home care packages services, the system would need to increase the number of available packages by more than 50 per cent.

    The national wait list for home care far exceeds the median wait time of four months for hip surgery, where five per cent of people wait more than a year for a total hip replacement in Australian public hospitals.”