Australian Property Prices Rebound Amid Migration Surge and Housing Crisis

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Australian property prices have made a surprise recovery, driven by a migrant influx and low housing supply, contrary to expectations of a prolonged slump due to soaring interest rates. In the past decade, average prices in Sydney, the country’s most populous and expensive city, have risen from A$640,000 to A$1.27 million (S$1.13 million) [1, Jonathan Pearlman]. However, this recovery has led to concerns over the growing housing crisis and the country’s ability to support an increasing population.

A recent report from the National Housing Finance and Investment Corporation predicts a shortfall in housing supply of over 100,000 dwellings by 2027, with nearly 80,000 within the next decade [2, Ian Bushnell]. The rapid return of overseas migration, insufficient housing supply, and rising construction costs and interest rates have put immense pressure on rental markets, especially in major cities [2, Ian Bushnell]. Ian Bushnell writes, “We’re just not building enough homes to keep up with increasing demand” [2].

The Australian Federal Government is currently reviewing the country’s migration system, with this year’s migration intake expected to reach 235,000 people, returning to pre-pandemic levels [2, Ian Bushnell]. Businesses are lobbying the government to raise the target for permanent skilled migration intake to 200,000 places in 2023-24 and 2024-25 to address worker shortages [2, Ian Bushnell]. The question remains: where will these people live?

The Housing Accord, a market-based response from the Federal Government, has been criticized as inadequate for addressing the issue [2, Ian Bushnell]. Australia’s increasing population has prompted discussions on the country’s optimal population and the necessary infrastructure investment to support it [2, Ian Bushnell]. Bushnell argues, “Carrying on as if Australia is the Tardis and that, magically, the market will supply all our needs, is folly” [2].

Australia’s housing crisis, the pressure on natural resources, and the lack of infrastructure investment are affecting living standards [2, Ian Bushnell]. Moreover, the migration system review must include a revision of the population the country can manage, along with proper planning to accommodate the accepted number of migrants [2, Ian Bushnell].

References:

Jonathan Pearlman, “Australian property prices make surprise recovery, spurred by migrant influx and low supply.” https://www.straitstimes.com/asia/australianz/australian-property-prices-make-surprise-recovery-spurred-by-migrant-influx-and-low-supply

Ian Bushnell, “Australia needs to catch its breath on migration amid housing crisis.” https://the-riotact.com/australia-needs-to-catch-its-breath-on-migration-amid-housing-crisis-friday-opinion/650644