Grattan blames NIMBYs, not mass immigration, for housing affordability woes

The Grattan Institute’s program director, Brendan Coates, gave a speech last night to the Henry George Commemorative Lecture, where he attacked NIMBYs for stifling housing supply and driving up the cost of housing, while glossing over mass immigration fueled population growth (which the Grattan Institute constantly cheer-leads):

The post-2005 surge in migration also led to dramatically more Australians needing somewhere to live. Reserve Bank researchers estimate that the high migration in the first decade of this century resulted in housing rents being 9 per cent higher by 2018 than they would have been if population growth had stayed at 2005 levels.

Housing demand from extra immigration shouldn’t lead to higher prices if enough dwellings are built quickly and at low cost.

Past episodes of rising housing demand did not see such rapid increases in house prices. Rapid population growth in Australia in the 1950s was matched by record rates of homebuilding…

But housing construction in Australia in recent years hasn’t kept up with increasing demand.

Heading into the COVID pandemic, Australia had just over 400 dwellings per 1,000 people, which was among the least housing stock per adult in the developed world. Australia had also experienced the second greatest decline in housing stock relative to the adult population over the 20 years leading into COVID.

Australia’s land-use planning rules are highly prescriptive and complex.

The prices of new homes, including apartments, exceed the cost of building more of them…

The key problem is that many states and local governments restrict medium- and high-density developments to appease local residents concerned about road congestion, parking problems, and damage to neighbourhood character. The politics of land-use planning – what gets built and where – favour those who oppose change. The people who might live in new housing – were it to be built – don’t get a say…

Heritage protection is a particular form of planning regulation that slows or stops development…

A sustained increase in housing supply would have a big impact on house prices in the long term. For example, if an extra 50,000 homes were built each year for the next decade, national house prices and rents could be 10-to-20 per cent lower than they would be otherwise.

Take a look at the next chart. Australian dwelling construction rates picked up massively over the last decade:

Australian dwelling construction boomed over the past decade.

Yet, housing construction failed to keep up with demand because population growth accelerated even more following the doubling of immigration from 2006:

Australia’s immigration intake more than doubled after 2005.

Thus, the notion that Australia’s housing affordability woes have been driven by a ‘lack of supply’ is utterly ridiculous.

Why is Grattan so focused on the supply-side of the housing market rather than the obvious solution of ensuring that immigration stays at sensible and sustainable levels?

Obviously, jamming 235,000 migrants into Australia every year, as projected by the Intergenerational Report (chart below), will make the supply problem intractable. How will Australia solve the ‘supply’ problem when it is projected to grow by 13.1 million people (50%) in only 40 years – equivalent to adding another Sydney, Melbourne and Brisbane to Australia’s existing population? And yet Grattan cheer-leads this ‘Big Australia’ policy.

Back to ‘Big Australia’

The Grattan Institute should be honest and admit that the single biggest driver of any Australian housing shortage is extreme immigration. Accordingly, Grattan should instead lobby against the Albanese Government’s planned record increase in both permanent and temporary migration, which will make any housing shortage so much worse.

In fact, the single best thing policy makers can do to ‘solve’ Australia’s housing supply problem is to ensure that immigration does not return to its manic pre-COVID level, nor exceed it as planned by the Albanese Government.

Australia’s, ‘housing shortage’ could be permanently solved with the stroke of a pen by the federal government. All it needs to do is reduce immigration back to historical pre-2005 levels. This would also negate the need to bulldoze our suburbs into high density. It would also align with the wishes of the Australian people, who overwhelmingly do not support a return to pre-COVID levels of immigration.

Why won’t the Grattan Institute acknowledge these basic facts instead of continuously pumping ‘Big Australia’ mass immigration and then complaining about the consequences?

The Grattan Institute’s cognitive dissonance surrounding immigration is a shame. Because a lot of other policy proposals mentioned in Brendan Coates’ speech are sound:

I would take Coates seriously if he added maintaining lower, sustainable net overseas migration to the above list.

Australia will never solve the ‘supply’ problem by adding hundreds of thousands of migrants every year. At least be honest about it.