There’s only one genuine solution to the rental crisis


On Australia Day, I was interviewed by ABC Brisbane’s Steve Austin, where we discussed in detail the impact of the federal government’s mass immigration policy on Australia’s rental crisis.

This discussion was in response to the nation’s population ticking over 27 million people last week – an increase of 8.1 million people this century – alongside the official projection that Australia’s population would hit 40.5 million people by 2062-63:

If this projection came to fruition, it would mean that Australia’s population would have more than doubled in just over 60 years, from 18.9 million at the end of 1999 to 40.5 million by 2062-63.


Below are a few highlights from the 14-minute discussion.

Edited Highlights:

Australia added 518,000 net overseas migrants last financial year, which was the largest on record.

Australia’s hit this 27 million population milestone more than 30 years faster than was projected by the Australian Treasury in its first Intergenerational Report in 2002.


That report projected that Australia’s net overseas migration would average 90,000 a year, which was sort of the norm back then. But in the 15 years leading up to the pandemic, the federal government decided to ramp that up to 220,000 a year.

Historical NOM

And post-pandemic, we’ve had net overseas migration of nearly 520,000. It’s actually projected to fall a bit this year, but still be at 375,000, which would still be the second highest net migration in Australia’s history after last year’s record figure.


We are experiencing a monumental rental crisis. It’s basically because we’re bringing in massive amounts of migrants, mostly into Sydney and Melbourne. Then that’s forcing Sydney and Melbourne people out of those places and they are rushing up to places like Queensland.

Brisbane gets the second round effects when Sydney and Melbourne people leave because it’s unaffordable, and they go to Brisbane, which then pushes up their house prices and rents.

We’re not building enough homes, infrastructure or anything to keep up with the growth – we haven’t for really 20 years – as your residents know first hand from their own lived experience.


This hasn’t just come the last year; this has been building for years because we haven’t built enough housing and we haven’t built enough infrastructure.

It’s absolutely disastrous. Australia cannot build enough homes to keep up with the expansion of its population. That’s plain to see.

The nation’s rental vacancy rate across the capital cities is running about 1% and that’s about the lowest in history. That just shows you we don’t have enough homes for these people.

Rental vacancy rate

Source: CoreLogic

That’s obviously cascaded into prices as well because we’re getting this ‘fear of missing out’ with people who can’t get a rental saying: “look I’ve got to buy no matter what because I don’t want to be stuck as a renter paying not just high rents, but not being able to find a rental property”.

It’s a double-edged sword for anybody trying to get a house. Whether you’re looking to buy, you’re going to get absolutely smashed. And if you’re renting, you’re getting even harder smashed.


It’s a national problem, but it’s worse in the major cities, unfortunately.

All of the forward-looking indicators on housing construction are looking terrible: dwelling approvals, dwelling commencements, and dwelling completions.

Housing supply and demand

Loans for new homes, everything is running around decade lows. They’ve all collapsed.

Construction loans

Based on those data, we’re looking at about 160,000 new homes being built a year when the population has just risen by around 620,000 people. It’s not nearly enough.


The federal government has launched this 1.2 million homes over five years initiative, which requires 240,000 homes a year.

We’re running 70,000 below that level, and there’s no way we’re going to keep up when you have high interest rates, you’ve got builders falling over left right and center, high materials costs, and also labour shortages.

So basically, the only solution to Australia’s housing crisis is to dramatically cut immigration because you have got to take the pressure off demand.


As it stands, demand through population growth is going to run ahead of supply for years and we’re going to have a worsening housing problem, a worsening rental crisis, higher prices and higher rents. That’s the bottom line.

The federal government always bangs on about the housing crisis being a supply problem because we’re not building enough homes.

Well, we’re not building enough homes because we’re bringing in too many people. It’s really a demand problem.

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.