CoreLogic: Lower immigration will smash property market

CoreLogic’s Tim Lawless believes that the collapse in immigration will hit Melbourne’s and Sydney’s housing markets especially hard:

“Sydney and Melbourne arguably show a higher risk profile relative to other markets due to their large exposure to overseas migration as a source of housing demand, along with greater exposure to the downturn in foreign students, stretched housing affordability and already low rental yields that are likely to reduce further on the back of rising vacancy rates and lower rents”…

“On the demand side, occupancy rates are being negatively impacted by a stalling in overseas student numbers, as well as many domestic students studying remotely, and a stalling in international migration”.

This comes as the ABS this week revealed that Sydney and Melbourne received 63% of Australia’s total net overseas migration of 239,600 in 2018-19:

It’s funny how the property lobby for years argued that Sydney’s and Melbourne’s housing bubbles were being driven by a lack of supply, not excessive immigration (population growth).

Now the truth is being revealed, with the property industry admitting that falling immigration will smash the market.

Extreme house prices in Sydney and Melbourne have stopped nearly an entire generation from owning a home, while consigning the rest to a lifetime of mortgage servitude.

Thus, removing one of the key demand drivers – mass immigration – will significantly improve housing affordability, as well as forcing fewer people to live in tiny apartments.

Lower immigration is exactly what the Australian economy needs and should be greeted with joy.

Unconventional Economist
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Comments

  1. Andy McPherson

    A brilliant take down of CoreLogic’s hypocrisy!

    Extreme house prices in Sydney and Melbourne have stopped nearly an entire generation from owning a home, while consigning the rest to a lifetime of mortgage servitude.

    This is what I find odd about Australians: we don’t hate those who pushed up our house prices.

    Is it because:
    1. we are such nice people, or
    2. that we don’t want to be seen as hating foreigners, or
    3. because we all one day hope to be a property owning millionaire?

    • 6. We are greedy slobs who would push an old lady into traffic to get ahead

      Plus you may find there are alot, and growing number of people that do hate them

    • mikef179MEMBER

      Pretty sure it’s 3. To have a property empire is the Great Australian Dream.

      • darklydrawlMEMBER

        Yep, I would vote 3. Nobody want it to stop as they want to have turn in future. If it stops – that means they will never get the chance to be a property mogul…. End of the Aussie dream 😛 Go figure.

    • TailorTrashMEMBER

      7 ) Australians are increasingly recent arrived immigrants who bring their push ,shove and grab outlook with them .

    • 4. The media, politicians, left and globalists do everything in their power to propagandise against understanding this reality, and to demonise the only sensible reaction to it.

    • 8. equity in parents’ property helps their children to buy a place of their own.

    • Property is a religion. Always goes up. Easy money. Tenants pay off the house. Rent money is dead money. Etc etc. Hear it all the time. It requires a huge reset before that mentality changes.

      • nexus789MEMBER

        That’s what we are likely to get if the financial system craps itself. Even without that those that are loaded with debt will find it challenging.

  2. mikef179MEMBER

    No, no. I don’t think you understand. It’s not binary. You know. Like how Australia has an unaffordable housing market but we want to keep prices going up. You can have both at the same time in ‘straya.

  3. bringing more people into here with massive unemployment is a disaster.

    do we want more cronullas??

      • nexus789MEMBER

        It would be a disaster. Given that sectors of the debt driven service economy will not be coming back to pre virus levels.

  4. TailorTrashMEMBER

    Well the “property market “ does need smashing that’s for sure. Be nice to see provision of homes for families as a national goal . But sadly I think that Australia is long gone .

  5. GramusMEMBER

    The powers that be will try to pump it back up. Just you watch.
    From their perspective there is no alternative.

  6. SwampyMEMBER

    If one of the political parties (and not the Sustainable Judean People’s Front for Sustainable Australia or Sustainable Population or is it Sustainable Development of a Sustainable Australia We Can Not Decide) could only harness this….

    It’s amazing more of the proletariat can’t parlay this into “why are we importing so many people?!” Or “I can’t afford a house because Quantitative Peopling” then fark, what hope have we got

    • Pre CCP Virus, anyone who dared point this out and suggest perhaps we should lower immigration, was either:

      (a) shouted down as a racist, or;

      (b) shouted down by everyone with a finger in the Great Australian Ponzi Scheme pie that is house prices.

      Or both.

  7. darklydrawlMEMBER

    I find it amusing that after years of denying that immigration was (at least partly) responsible for the housing price boom, the whole real estate industry is suddenly panicing that throttled immigration might cause prices to fall.

  8. Arrow2MEMBER

    But corelogic also says property is up when it obviously isn’t.

    This means they get hung from a gaslight instead of a regular lamppost. Suits them better.

  9. Willy2MEMBER

    – As said many times before here on this blog. Immigration doesn’t drive property prices. It doesn’t push prices higher and it doesn\t drive prices lower either. It’s (mortgage) debt / credit that drives proprty prices higher or lower.
    – But there are also still some 80.000 empty dwellings. And only now with the COVID-19 crisis the ugly truth is finally exposed.

    • Why then has Sydney/Melbourne boomed while the other capitals have gone sideways? Same banks. Same interest rates. Same credit conditions. Difference: immigration.

      Same can be said for Perth where prices boomed when immigration was booming and busted when immigration fell off a cliff.

      Use your brain Willy2.

      • GarethMEMBER

        Higher average salary, higher propensity to borrow.

        Not sure Australian populace would have issues with current high immigration levels if there was a requirement to spend 5-10yrs in a regional centres before being able to a. apply for citizenship b. move to a capital city

        But agree, we dont need more debt slaves in cities. We also need to act more like other countries preventing non citizens from buying local real estate.

      • Willy2MEMBER

        – I AM using my braincells !!!

        – I have 3 counter examples:
        1) US: the US has / had high immigration rates but in spite of that the US had a housing bubble AND a housing BUST in the 1990s & 2000s. A bust in spite of high immigration.
        2) Japan: this country has ZERO or close to ZERO immigration, yet it had a housing bubble in the 1980s.
        3) Sydney: Since (early) 2017 prices have fallen (Source: Martin North DFA)
        – Landprices in western Sydney are down by some / up to 50%
        – House prices are down by some 30% in some suburbs in W.-Sydney.
        – Units in the middle of “Greater Sydney metrpolitan area” (in a suburb called Ryde) are also down by some 30%.
        – But immigration was still VERY high (at record highs ??) in 2017, 2018, 2019. If immigration drives property prices then we should have seen those property prices in Sydney remain high or go higher.

      • Willy2MEMBER

        – I want to attack one other misconception living in your braincells. I.e. immigration is responsible for the congestion in e.g. Sydney. Because this is only PARTIALLY true.
        – One also has to think about australian households. In the 1950s the average household had one income whereas the average household now has (close to) 2 incomes. Two incomes per household instead of 1 income per household also means that more and more australian households (but this has happened in Europe & North America as well) now have, are more likely to have 2 cars instead of 1 car. And 2 cars (per household) driving around simply means more traffic and more congestion.
        – So, even without immigration congestion would have increased. Immigration only has made it worse.
        – @L.v.O. Time to do research on the dynamics of having 1 or 2 cars per australian Household.

        • Poochie the Rockin DogMEMBER

          All good points – high immigration is just one of many factors, including moving to dual incomes, deliberately constrained supply, and increased debt that explain why house prices have risen so high. Tighter restrictions on lending were what caused prices to fall in 2017 while immigration was high, which show that easy money has a greater effect on prices than immigration, but the difference between the states can only be explained by differences in the states can only be explained by supply constraints & immigration. We’re now at the point where supply can’t be reduced, interest rates can’t be dropped further, household income can’t rise, which leaves immigration as the only potential option to raise prices again. That domain economist is right, it’s the only thing they can do without having to get creative ( setting fire to all the current buildings that have flammable cladding is one option)

          • Willy2MEMBER

            – There are no easy solutions any more. And haven’t been for a long long time. All we can do is hope for the best.
            – I mentioned “traffic congestion” because LvO also blames that solely on immigration. But the reality is more complicated.

      • Willy2MEMBER

        – Immigrants went & go to predominantly to (large cities like) Sydney & Melbourne because those cities already have a substancial amount of immigrants. There e.g. chinese immigrants will find people who came from the same country called China.
        – The driver again is debt / credit. Perth (& WA) and to a lesser extent Brisbane (& QLD) had a mining INVESTMENT boom between say 2000 and 2011. That was driven by debt and debt drives property prices but also employment. So, when the mining INVESTMENT boom was over migrants went back to their countries of origin.
        – However, here is the rub. Poor immigrants simply can’t afford to go back to their countries of origin and are stuck in Australia (for ever).

      • Willy2MEMBER

        – Right. The key driver here is CREDIT / DEBT, NOT immigration !!!! and that’s what one L.v.O. doesn’t want to know.

        – I have 3 examples:
        1) US: the US has / had high immigration rates but in spite of that the US had a housing bubble AND a housing BUST in the 1990s & 2000s. A bust in spite of high immigration.
        2) Japan: this country has ZERO or close to ZERO immigration, yet it had a housing bubble in the 1980s.
        3) Sydney: Since (early) 2017 prices have fallen (Source: Martin North DFA)
        – Landprices in western Sydney are down by some / up to 50%
        – House prices are down by some 30% in some suburbs in W.-Sydney.
        – Units in the middle of “Greater Sydney metrpolitan area” (in a suburb called Ryde) are also down by some 30%.
        – But immigration was still VERY high (at record highs ??) in 2017, 2018, 2019. If immigration drives property prices then we should have seen those property prices in Sydney remaining high or go higher.

        • Ok then that even proves the point more, if immigration isnt driving house prices then why have it? Why boost the population to improve gdp when gdppp goea down directly as a result of it?

          • – It makes perfect sense for an employer. And here we come across the words “Debt” and “credit” again. The general line of thought is as follows.
            – With rising levels of debt a rising amount / percentage of (wage-)income (for workers, households, shops & companies alike) has to be directed towards servicing that debt (interest & principal) and a declining amount of income can be used for rent, wages, buying say food, cars, clothes, inventory, raw materials etc. etc. And this means that shops, companies etc. also see that Demand is “weak”.
            – But these companies still want to make a(n) (increasing) profit. So, companies “import” workers who are willing to work for a lower pay. This blog (MacroBusiness) has brought many articles about how employers were involved in wage-theft, under paying workers, unpaid temporary internships etc. etc.
            – That’s why there is so much “downward pressure” on wages. And “downward pressure” on wages spills over in “weaker demand” for rental properties and houses (to be bought with mortgages). In that regard, immigration undermines the demand for properties and lead to lower property prices, NOT higher property prices.
            – This “downward pressure” on property prices has been mitigated by rising levels of debt (= more demand) in the last say 25 years. But now with rising unemployment rising (fast) income is also falling at the same pace and spillsover into (more) downward pressure on property prices.

          • BigDuke6MEMBER

            Go to zerohedge little Willy. Educate yourself. It takes longer these days. Perhaps 6 months , maybe a year
            Then you will know

  10. Willy2, what your saying makes perfect sense.. it also proves that immigration is for the 1%, not for the aggregate benefit of society.. also i am not for or against immigration, just logic… if the australian labor supply chain needs farm workers, bricklayers and doctors… why are we bringing in people to train as accountants and then work as uber drivers… i understand economic theory, but not quantifying and reconciling the needs of the nation in a specific manner is downright dangerous.. to make it short, the pediatric oncologist who i met on a temporary work visa is a better candidate for PR than the graduated accountant who cant get a job.