Does Migration Really Cause Housing Crisis Australia?

The Housing Crisis in Australia: Is Migration the Main Cause?

Australia housing crisis: When discussing housing and infrastructure, any shortfalls or pressures faced are often attributed to migration. But how much does migration impact housing and infrastructure?

Housing

Australia has been experiencing a housing crisis for a number of years. The lack of available housing, housing affordability, the lack of rental properties, and the rising cost of rent all contribute to the housing crisis.

Political parties have focused on the housing crisis when revealing budgets and campaigning for the federal election. It seems that everyone’s solution to combating the housing crisis is to reduce Australia’s migrant intake; however, migration isn’t the only contributor to the housing crisis.

What caused the housing crisis?

A number of factors have contributed to the housing crisis, including government policies that have significantly influenced the housing market and affordability in Australia and an increasing population.

Government Policies

Tax incentives, such as capital gains tax exemptions, negative gearing, and first-home buyer grants, have been implemented to boost the property market. These policies have assisted certain segments of the population but have made it more difficult for many Australians to enter the property market or find affordable rental properties.

Population

Since international borders reopened in 2022, Australia’s population has increased by an estimated 1,538,039 people. Of this figure, 1,255,138 (80.9%) has come from net overseas migration.

In the recent federal election, the Coalition linked immigration and the housing crisis, vowing to reduce migration planning levels. While the number of migrants that have entered Australia since 2022 seems high, what needs to be remembered is that this figure comes after two years of no migration, so effectively this figure spans over five years, not two.

Infrastructure

A rise in population has a considerable effect on infrastructure. More people means there is more demand for roads, public transport, water, waste services, schools and hospitals. While governments have implemented planning to address infrastructure needs, other challenges are presented in the form of rising construction costs, a shift in investment priorities and labour shortages.

Ironically, some of the strain on infrastructure has been attributed to migration; however, overseas skilled workers are usually required to fill labour shortages in the industries required to build Australia’s infrastructure.

Will reducing migration planning levels help ease the strain on housing and infrastructure?

There are advantages and disadvantages to reducing migration planning levels – not just for housing and infrastructure but for Australia’s economy in general.

Reducing migration planning levels to combat the housing crisis was a hot topic during the federal election campaign. Former Liberal Party leader Peter Dutton strongly supported lowering the number of permanent visas each year and cutting net overseas migration. This may have eased some pressure on housing and infrastructure, but could also have caused negative impacts overall.

According to The Grattan Institute, reducing permanent visa numbers and reducing net overseas migration numbers would eventually see a reduction in rent and housing prices. However, cheaper rent and housing prices due to a reduction in permanent skilled visas could impact Australia in other ways.

Permanent skilled migration enables migrants with much-needed skills to fill labour shortages where local talent can’t be sourced. Reducing the number of skilled migrants will leave gaps in the Australian workforce. In addition, the revenue from visa applications will decrease, which in turn affects Australia’s bottom line. Not to mention that migrants with the skills to help with the construction of housing and infrastructure will be reduced, which could potentially add to the housing crisis.

Online financial publication Firstlins published an article stating that from September 1995 to September 2024, Australia, on average, built one new home for every one net overseas migrant. In the 12 months leading up to September 2024, developers built one new property for every 2.1 net overseas migrants. While some attribute this shortfall in housing construction to increased migration, others argue that a labour shortage, which migration could help resolve, is the real cause.

The impact of migration on housing and infrastructure is a complex issue with many facets. Addressing one aspect of the issue won’t necessarily fix the problem and could potentially cause more problems.

To learn more about any aspect of immigration, contact the team of registered migration agents at Visa Solutions Australia.

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