A Recipe for Housing Crisis and Economic Instability

A Recipe for Housing Crisis

Australia's immigration policy is in disarray, with no clear target or control over the number of people entering the country. This lack of control is leading to a housing crisis, as the number of new arrivals outpaces the construction of new homes.

The government's forecast for net overseas migration in 2024-25 is 340,000, revised up from 260,000 in the May budget. However, this forecast is unlikely to be met, and the longer-term forecast of 225,000 to 230,000 a year is also unrealistic.

In the 12 months to June 2024, net migration totalled 444,700. This high level of immigration is putting a strain on housing supply, as dwelling completions are not keeping pace with the demand.

The government has agreed on a housing target of 1.2 million dwellings over five years, but this target is unlikely to be met. On current policy settings, normal net migration is about 300,000 a year, or 1.5 million over five years. Add a 6-700,000 or so natural increase, and that means 2.1 million people are looking for a place to live over five years.

State governments and developers don't have enough money to build the infrastructure required for new developments, and there is a shortage of tradies and profit margins for developers to build enough apartments.

The government needs to take immigration seriously and set a clear target for net migration. It also needs to work with the crossbench to come up with a workable plan to cap the number of foreign students.

Poorly designed and managed migration will only worsen the level of skills and productivity in the economy. The government needs to focus on lifting the skill level of migrants and ensuring that they are working in skilled jobs.