Below is an article I wrote for News.com.au, which was published over the weekend:
Australia is in the midst of a huge crisis but it’s one we created for ourselves – and it’s hard to see a way out right now.
It is hard to go anywhere without hearing about Australia’s rental crisis.
And for good reason, with rents soaring at record double-digit rates across much of Australia on the back of record tight rental vacancies.
Australia’s rental market initially tightened over the pandemic due to a desire for more space, the growing trend to working from home and the need for home offices.
This saw the number of people per dwelling fall sharply, in turn lifting rental demand despite temporarily slow population growth.
More recently, immigration has soared, which has added massively to rental demand and tightened the rental market further.
Shortly after coming to office, the Albanese Government announced a range of measures to accelerate Australia’s immigration intake, including:
- 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
- allocating $36 million dollars and 500 extra staff to clear visa backlogs, thereby accelerating international arrivals.
These reforms pushed temporary visa arrivals to record levels in the latter part of 2022, driven by international students seeking work and permanent residency.
This week, it was revealed that a record 360,000 visa applications were lodged overseas by students last year, with the Federal Government also processing a record number of applications since the middle of 2022.
Australia’s rental shortage will be further inflamed by the Chinese Government’s directive that it will no longer recognise foreign academic degrees and diplomas if the study was conducted online.
This decision is expected to see 40,000 to 50,000 Chinese students land in Australia over the next few months, equating to roughly one-third of available rentals in both Sydney and Melbourne.
The upshot is that Australia’s immigration intake will be the largest on record in 2023 by a very wide margin, which will turn the rental crisis into a catastrophe.
Where are the hundreds of thousands of new migrants arriving supposed to live when there is already a dire shortage of homes for the existing population? On the streets?
A ‘Big Australia’ means a permanent rental shortage
The Federal Government dramatically lifted Australia’s immigration intake in the early 2000s.
Australia’s net overseas migration jumped from an average of 90,500 between 1991 and 2004 to an average of 219,000 between 2005 and 2019 – representing an annual average increase in immigration of 140 per cent.
Australia’s turbocharged immigration is also the primary driver of Australia’s chronic shortage of social housing.
According to the UNSW City Futures Research Centre, Australia’s social housing stock grew by only 9 per cent in the 14 years to 2020 against extreme immigration-driven population growth of 25 per cent.
The fact remains that so long as the Federal Government runs a ‘Big Australia’ immigration policy, the nation will forever suffer from housing (rental) shortages.
The Intergenerational Report projected that Australia’s population will grow by 13.1 million people (50 per cent) in only 40 years on the back of net overseas migration of 235,000 a year.
That population increase is the equivalent of adding a combined Sydney, Melbourne and Brisbane to Australia’s current population in only 40 years.
The entire housing (rental) crisis is self-inflicted by extreme levels of immigration. Yet moderating immigration back to long-run historical levels of around 100,000 people a year is never even considered.
Instead, governments continue to spruik increasing supply, such as the Albanese Government’s Housing Future Fund (HFF), which aims to build an additional 30,000 social homes over its first five years.
That’s 30,000 new homes against a projected immigration increase of 1,175,000 people over the same five-year period.
In other words, the HFF is a drop in the bucket of what is needed and will inevitably result in a worsening social housing shortage.
Ultimately, high population growth (immigration) is a direct policy choice, and one that most Australians do not support.
If policy makers genuinely want to fix Australia’s housing crisis, they must start by moderating population growth so that demand better matches supply.
Otherwise, Australia’s rental crisis will become a permanent feature of Australia.
