Australia’s rental crisis is self-inflicted

Advertisement

The tightest rental market in Australia’s history has delivered more hand wringing across the mainstream media.

The ABC reported that international students have been scrambling to find accommodation ahead of an expected return of more than 40,000 Chinese students over the next month following the announced snap ban on online learning at foreign universities a fortnight ago.

With student accommodation at capacity in many cities, they will be competing with other renters in an already tight rental market.

CoreLogic’s head of research, Eliza Owen, said the influx of international students would add to rental pressures, which could see prices jump even further.

Advertisement

“When you’ve got an already tight level of supply and ongoing demand, then prices can only go one way”, Owen said.

“It’s really something that in terms of the housing supply, we’re not very well positioned to cope with”.

In a similar vein, The Age described a “hellish housing Hunger Games” as Melbournians compete with internationals for rental homes.

Advertisement

“Contagion has spread to working people on moderate incomes with good rental histories, who sometimes rented for decades, [and] are finding the competition pretty intense and are missing out”, Tenants Victoria director of community engagement Farah Faroque said.

The fact remains that Australia’s rental crisis has been engineered by the federal government, which has deliberately opened the immigration floodgates via:

  • Increasing the permanent migrant intake by 35,000 to 195,000;
  • Increasing the duration of post-study work visas for international students by two years in areas of skills shortages;
  • Allowing international students to work unlimited hours while studying, effectively turning student visas into unrestricted work visas; and
  • Allocating $36 million dollars and extra staff to clear visa backlogs, thereby accelerating international arrivals.
Advertisement

These reforms, alongside the increase in the permanent migrant intake by 35,000 a year, are ‘red rag to a bull’ for students seeking to use the student visa system for work and migration purposes. They also explain the unprecedented surge in temporary visa arrivals, which will propel Australia’s immigration intake to all-time highs in 2023 and 2024:

Temporary visa holder stock

The fact remains that as long as the federal government runs a ‘Big Australia’ immigration policy, the nation will forever suffer from housing (rental) shortages.

Advertisement

The Intergenerational Report projected that Australia’s population will grow by 13.1 million people (50%) in only 40 years on the back of extreme levels of immigration. That’s the equivalent of adding another Sydney, Melbourne and Brisbane to Australia’s current population in ONLY 40 YEARS!

Thus, the Big Australia idiots running the nation are literally engineering an intractable housing shortage.

If policy makers genuinely want to fix the housing crisis, they must start by stabilising Australia’s population.

Advertisement

High population growth (immigration) is a direct policy choice. The first policy solution should be to stop making the situation worse by running an extreme immigration policy.

It isn’t rocket science.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.