Economists have warned that rebooting immigration back to pre-COVID levels will inflate property prices and rents, exacerbating Australia’s housing affordability woes:
Economists say about one extra home is required for every three migrants.
If Australia’s annual immigration intake lifts, beyond federal budget forecasts, to reach about 250,000 people in 2023, that would turn predictions of house price falls into price gains.
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“If immigration were to come back rapidly, we would see significant upward pressure on rents and significant upward pressure on house prices,” says AMP chief economist Shane Oliver…
If the scenario of 250,000 migrants by 2023 eventuates – and given recent calls from political leaders for a “Big Australia” driven by immigration, that’s entirely possible — he says house prices would jump about 5 per cent by 2023 and rents would lift about 7 per cent…
BIS Oxford Economics chief economist Sarah Hunter… and other economists worry that once migrants return demand in those areas, as well as other major capital cities, may outweigh supply…
Dr Hunter says that off the back of population growth, the cost of renting will increase by 2023, and that will feed into higher house prices…
SQM Research managing director Louis Christopher also told the parliamentary inquiry into housing affordability that rebooting ‘Big Australia’ mass immigration will destroy housing affordability:
“If we hit 40 million people, are the issues we’re going to face today going to improve or be worse?” he said. “Clearly they’re going to be worse. We should consider what to do about Big Australia.”
As I illustrated in my submission to the parliamentary inquiry into Housing Affordability and Supply, “any housing supply problem is first and foremost an excessive immigration problem”.
The latest Intergenerational Report (IGR) projects that net overseas migration (NOM) will ramp up to 235,000 people a year for decades to come:
This extreme immigration is projected in the IGR to increase Australia’s population by 13.1 million people (~50%) over the next 40 years to 38.8 million people – equivalent to adding another Sydney, Melbourne and Brisbane to Australia’s existing population.
According to the economists, this population increase will require around 4.4 million extra homes to be built (not accounting for demolitions and rebounds). That’s 110,000 housing additions a year required purely to keep pace with population growth (driven by mass immigration).
Such a population deluge will guarantee that housing demand swamps housing supply, resulting in worse affordability. It will also consign future Australians to live in high-rise shoe boxes:
The single best thing the federal government can do to ‘solve’ Australia’s housing woes is to ensure that immigration does not return to its manic pre-COVID level, nor is raised to the insane 235,000 annual NOM projected by the IGR.
The first goal of public policy should be to protect the welfare of existing residents and not make a problem worse. ‘Big Australia’ immigration violates this principle.