Migrants: Scapegoats or the solution to Australia’s housing crisis?

The reality is that Australia’s housing woes stem primarily from a supply-side issue that is the result of decades of poor housing policies on both sides of the political spectrum, not excessive demand.

While immigration does contribute to population growth, most migrants initially rent, taking time to adjust and choose a permanent location. This suggests that a reduction in migration would have practically zero impact on house prices in the short term.

Furthermore, demand by new migrants for rental accommodation is not evenly spread across the country, with many new migrants tending to gravitate to certain suburbs and localities. Therefore, any easing of pressure on rents resulting from a reduction in migration would be uneven at best, and unlikely to impact rent price growth in many locations.

As Australia’s population has grown through both local births and immigration, in recent years there has also been a trend towards smaller households (fewer people living in the same dwelling). This means Australians are spread across more houses today than in decades past, and require more dwellings just to house the same number of people.

Even with a potential decrease in annual immigration, these trends will continue, highlighting the need for a long-term solution focused on increasing housing supply rather than band-aid solutions that tinker only with short-term housing demand.

What about foreign investors?

Foreign investors are also often accused of driving up property prices and taking homes away from Australian residents.

Several state governments in recent years have impose stamp duty surcharges and higher land tax rates on foreign property investors. This is frequently touted as a mechanism for reducing competition between foreign buyers and Australian residents in order to make homes more affordable. However, the reality is that most foreign investors are restricted to only investing in new and off-the-plan properties. As a result, this penalty regime just disincentivises foreign investment in new developments.

Reduced interest from foreign investors means development projects are more difficult to get out of the ground. Furthermore, as foreign investors will rent out rather than live in the properties that they own, disincentivising foreign investment just makes our already severe rental housing shortage worse, rather than doing anything to help affordability or increase the supply of new rental housing.

Blaming migrants and foreign investors deflects attention from the real causes of housing shortages such as bureaucracy, red tape and excessive taxation of housing at all levels of government (a topic for another conversation).

Immigration: A potential ally in building a solution

Ironically, immigration can actually be part of the solution. By prioritising skilled migrants with backgrounds in construction trades, Australia can address a severe current shortage of qualified workers.

This would help expedite construction projects and ultimately increase housing supply. Additionally, a diverse workforce can bring fresh perspectives and innovative solutions to the construction industry.

Skilled migrants can contribute not only through their construction expertise but also through design and planning. Architects and engineers from diverse backgrounds can bring innovative approaches to housing development, potentially leading to more efficient and affordable housing solutions.

Fostering a sustainable housing market for all

Simplifying a complex issue by scapegoating migrants and foreign investors does not lead to effective solutions, and a more nuanced understanding of the factors at play is essential. Instead of kicking around the political football of migration, we should be focusing on incentivising and streamlining new housing supply.

By utilising the positive contributions of immigration, Australia can pave the way for a more sustainable housing market that benefits residents, both new and established.

Ultimately, the goal is to create a housing market that provides affordable and accessible options for all Australians, regardless of their background or how long they’ve called Australia home.

Simon Buckingham and Ian Grayson, Results Mentoring.