Mismanagement of immigration is a major cause of worsening housing affordability, experts have told The New Daily.
A new study by Industry Super Australia found governments had failed to act on clear evidence that immigrants were settling in a “limited number of localities”, putting significant stress on the housing supply in those areas.
ISA’s chief economist Stephen Anthony said governments at all levels failed to plan for the concentration of new arrivals to Australia, contributing to overheating in the Melbourne and Sydney property markets.
“We forgot you need to put plans down when you grow cities. For that reason we will be playing catch-up on planning – if we ever catch up,” he said.
Mr Anthony said there needed to be a rethink of the way migration and housing policy are handled, so local governments are helped to manage booming populations from international and interstate migration.
“Government lacks coordination – policy is occurring inside silos, people who manage foreign investment don’t talk to anyone else,” he said.
The latest ABS migration figures show most migrants to Australia came to Victoria and New South Wales in 2015-2016, with the two states adding 65,007 and 71,161 overseas migrants respectively.
That is in addition to 16,699 interstate migrants to Victoria – New South Wales actually lost 11,349.
ISA’s report gave particular attention to “the significant uptick in Chinese ‘family’ purchases of established property” as explaining the significant portion of housing demand near many schools and universities.
Latest estimates for the June quarter 2017 from National Australia Bank indicate 17 per cent of new apartment buyers and 11 per cent of new house buyers in Australia are foreigners.
Mr Anthony said: “The issue is a dog’s breakfast, it’s moronic that people could grab resources from familial groups to buy property.”
Australia’s foreign investment policy is aimed at steering money into building new housing, but experts like Stephen Anthony say it’s failing.
“We want students to buy new stock, not existing stock,” he said.
International student enrolments have picked up since 2013, with 343,000 student visas issued in 2016-17.
The jump in student numbers coincided with significant Chinese real estate investment, which rose from around $1 billion in 2008-09 to almost $32 billion in 2015-16.
The ISA report found a strong link between loan activity and sales of existing houses in Sydney and numbers of foreign students coming to Australia.
Immigration: benefits outweigh costs
Saul Eslake, independent economist and vice-chancellor’s fellow at the University of Tasmania, agrees immigration has been a leading factor in driving house-price growth in Australia, but cautions the benefits outweigh the costs.
“There is no question that immigration isn’t feeding demand for housing,” he said.
“Federal governments control international immigration. There’s a coordination problem, the capacity to meet housing demand is a state problem.”
He said if Australia were to slash immigration by 50 per cent, it would bring on a fall in house prices, but that the costs of cutting immigration to the economy would be enormous.
“We should have better planning to meet the housing needs rather than throw our hands up in the air and say we can’t coordinate.”
The federal government this week announced it had finally passed laws that charge foreign owners of residential real estate who leave their houses unoccupied for six months in a 12 month period.
In a joint statement Treasurer Scott Morrison said “tighter restrictions on investment lending are helping take pressure off Australia’s housing market”.
“The reforms passed today are a further illustration of the government’s commitment to improving housing affordability for Australians,” he said.