The housing affordability crisis in Australia has emerged as a central issue ahead of the 2025 election. With rising concerns over living costs and the Housing Crisis, many politicians, including Opposition Leader Peter Dutton, have pointed to migration as a key factor.
However, The Guardian highlights that the relationship between migration and housing affordability is more complex than it appears. While migration rates have surged, the broader causes of the housing crisis involve multiple factors beyond just population growth.
The Numbers Behind Migration and Housing
In recent years, net overseas migration (Nom) has surged to levels unseen in the decade prior to the pandemic. For example, in 2022-23, Australia saw 535,000 migrants arrive, a significant increase from the pre-pandemic average.
In 2023-24, the figure remained high at 435,000, but forecasts predict a decrease to 335,000 in the current financial year. These figures have undoubtedly fueled debates about the impact of migration on housing, but the numbers alone do not provide a clear answer.
As the government projects the Nom to drop further to 260,000 by 2025-26, the conversation remains dynamic.
However, doubts persist about whether migration will settle at these lower levels, considering the government’s struggle with forecasting migration trends, which has been problematic, especially in the post-Covid period.
Does Migration Alone Drive Housing Prices?
While migration has undeniably increased the population, the relationship between migration and housing affordability is more complex than it might first appear.
Experts, such as Peter Tulip, Chief Economist at the Centre for Independent Studies, argue that the rise in house prices cannot be solely attributed to migration.
According to Tulip, while population growth in the 2000s added 9% to housing costs by 2018, the recent surge in house prices—up by 28% since December 2019—cannot be explained by a similar increase in migration.
In fact, population projections by the government show that Australia’s population is largely in line with pre-pandemic expectations.
If we’ve gone back to population levels we projected prior to the pandemic, then the change in immigration numbers doesn’t explain the change in cost of housing – Tulip says.
There are two separate policy questions: what should be our level of immigration, and given that, are we providing enough housing for the level of population growth we have decided on? The first is a value judgment, and lots of people will disagree. The second question is a technical one, and the answer to that is the housing market is failing.
The Supply Side of the Equation
One key issue contributing to the housing crisis is the lack of sufficient housing supply to meet demand. The housing market is simply not keeping pace with population growth. This problem is compounded by a range of factors, including high construction costs, zoning regulations, and labor shortages.
Without addressing these supply-side challenges, even a reduction in migration may not lead to significant improvements in housing affordability.
It is also important to acknowledge the economic and societal contributions made by migrants. Skilled migrants, in particular, boost productivity, enhance the workforce, and contribute to government revenues.
Economists, such as Brendan Coates from the Grattan Institute, argue that reducing migration could make housing marginally cheaper but would likely come at the cost of lower economic growth and a decline in Australians’ incomes.
Migrants contribute greatly to Australia’s prosperity and shape our diverse society. Skilled migrants in particular lift the productivity of local workers and boost government budgets, raising Australians’ incomes – Coates explains.
Cutting migration, and especially permanent skilled migration, may make our housing a bit cheaper. But it would definitely make us poorer.
Political and Public Reactions to Migration
Public concerns about migration have also been voiced by media figures like Peter Fegan, an Australian radio host, who questioned how the country could accommodate an influx of 260,000 new migrants amid a housing crisis.
I don’t know where 260,000 new migrants will go. I know that they’ll work. But we’re in a housing crisis. It doesn’t make sense to me – he said during a radio segment.
Meanwhile, Peter Dutton has capitalized on these concerns, accusing the Albanese government of mismanaging the migration program.
The other impact Australians are feeling from the Albanese government’s poor management of the migration program is from congestion on our roads and pressure on existing services which are stretched, like seeing a GP – Dutton stated
In last year’s budget reply. Dutton further argued that the government is unintentionally incentivizing people to stay in Australia with favorable visa conditions, adding to the pressure on the housing market.
The Australian government, at the moment, has a sugar bag on the table and is providing incentive for people to stay, not to leave, which is part of the housing crisis that they’ve created – he said.
