Mass immigration drives huge shortage of affordable homes

The Australian Housing & Urban Research Institute (AHURI) has warned that the shortage of affordable rental housing has risen since 2011 and will continue to worsen in coming years. The AHURI estimates that the shortage of affordable homes for the lowest 20 per cent of income earners now tops 212,000. The lead researcher, Swinburne University’s Professor Kath Hulse, says that neither the public or private sector are building enough affordable homes. The AHURI has concluded that the federal government needs to build at least 200,000 affordable homes over the next 10 years:

The private rental sector (PRS) is the fastest growing part of the Australian housing system, increasing by 17 per cent 2011–2016, more than twice the rate of household growth (7 per cent), continuing a trend observed since 2001.

There is longer-term structural change in the private rental market, notably an increased concentration of supply at mid-market levels and more middle and higher income private renter households. • The research found an acute, and increasing, national shortage of private rental dwellings for Q1 households (lowest quintile household incomes): 212,000 dwellings in 2016…

Between 2011 and 2016, the Australian population grew by 8.8 per cent to reach 23.4m people (up from 21.5m people in 2011)… Two in five people live in just two cities, Sydney and Melbourne, which have a combined population of 9.3m people—and which are growing rapidly17 (ABS 2017b). This pattern of urban settlement is important, as most population growth, and most in-migration, is focussed on a few large state capitals, adding additional demand for private rental housing in key metropolitan areas—particularly Sydney and Melbourne…

Most striking is the changing profile of the rental market in Sydney, where the supply of affordable rentals declined dramatically 2011–2016 (and 2006–2016), with a large increase in private rental dwellings affordable to middle- and higher income households.

The profile in Melbourne is roughly akin to the national profile presented in Chapter 3 (Figure 6)—that is, with a decrease in rental dwellings affordable to lower income households—but not to the extent evident in Sydney…

The growing shortages of private rented dwellings which are i) affordable and ii) affordable and available for Q1 households in each capital city are presented in Table 5…

The main contributor to shortages in each capital city is lack of affordable supply, not occupation by households on higher incomes, which serves only to exacerbate a supply problem.

Not surprisingly, the greatest numerical shortages in 2016 were in the two largest capitals (Sydney and Melbourne)…

Our research suggests that at least 200,000 additional dwellings of a mix of types are needed (based on 2016 figures), requiring a minimum capital program of 20,000 new units a year for 10 years, with a priority given to capital cities and large regional cities with demonstrated shortages.

This figure is conservative, as the shortage estimates include only those households that were living in private rental housing in 2016 and excludes discouraged Q1 households that have had to move into a variety of informal arrangements, or postponed household establishment as children stay with parents for longer.

With Australia’s population projected to balloon by 17.5 million people over the next 48 years, driven entirely by net overseas migration:

And Australia’s major cities to roughly double in size:

Housing shortages will necessarily worsen.

The solution is to dramatically reduce Australia’s immigration intake back to historical norms:

No more policy band-aids.

Leith van Onselen

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