Migration is not to blame for Australia’s housing shortage

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When my parents migrated to Australia 33 years ago, Japan was at the height of its economic power. They were often asked why they moved when business was booming in Japan. In 1990, Australia’s annual production was about $450 billion compared to $4.8 trillion for Japan.

My parents’ first answer seems trivial: “The weather.” (Dad can’t stand the cold.)

Immigration is often blamed for Australia surging house prices, rather than decades of failure domestic policy.Credit: Matt Davidson

They also came for the opportunities Australia presented, and to put their skills to use: Mum taught Japanese to high school and university students and Dad pursued a PhD in physics.

A year later, Japan’s asset bubble collapsed, and its economy entered what became known as the lost decade. It was the result of several factors including overly speculative investment in the country’s real estate and stock markets, and excessive lending by the banks.

Growth slowed, deflation set in and the Japanese government and central bank struggled to revive the economy. It was a fall from grace from which the country never quite recovered.

Last year, Japan’s annual production was roughly the same level it was in 1993. Because of this, some economists say the lost decade has spread across multiple decades.

What does this have to do with immigration and Australia’s housing crisis?

A key factor that has held Japan back over the past few decades is its shrinking, ageing population: a trend our government, through the intergenerational report, has warned could intensify for countries including Australia in the years ahead.

Some, seeing Australia’s rising house prices – and the prospect of homeownership slipping through their fingers – blame “mass immigration”.

While it’s true Australia’s population is growing at its fastest rate since 2009, at 2.2 per cent, it’s partly a reflection of the country playing catch-up after borders closed during the pandemic.

Blaming migrants is not new. They’ve historically been a convenient scapegoat to explain economic problems because “they” are not “us”. It’s easier to blame someone else than to face our own problems.

However, there are a few inconvenient truths which complicate the belief that immigration is to blame for our housing crisis.

Those arguing for brakes on immigration say immigrants drive up demand for housing. The more people there are, the more demand there is for housing, they argue. Economics 101: the stronger the demand, the higher the price.

But immigrants aren’t one-dimensional housing guzzlers. They can also add to the supply side of the equation, especially if they’re builders, developers or entrepreneurs, bringing skills that fill gaps in our job market. If we’re going to put speed bumps in our immigration policy, it should be about focusing on the skills we need.

The shortage in tradies, especially during the pandemic, has been well documented. Training more Bob the Builders, especially when we have a labour shortage, will take time. Bringing in workers with the required skills fast-tracks that process and gets construction under way faster.

While obsessing over house prices is a national pastime, economic growth tends to feel more abstract. But it can translate into higher incomes and better standards of living, so it’s an important measure. Immigration helps fuel economic growth, and often economic growth per person.

This is especially important because we’re choosing to have fewer children and, let’s face it, none of us are getting younger. In 40 years, the number of Australians aged 65 and over is expected to double and the number of people aged 85 and older is set to triple. Without skilled migrants, the proportion of working-age people will fall short of our requirements, leaving gaps in critical areas such as health and aged care where we’ll see greater demand.

Blaming migration for Australia’s housing shortage is a cop out. Not only does it excuse past inaction and distract from solutions that have been knocked back for decades – such as winding back zoning laws, replacing stamp duty with land tax, expediting building approvals and investing more in social and affordable housing – but it also risks leaving us trailing behind our needs in years to come.

If you’ve visited Japan, you’ve probably marvelled at a number of things: ancient temples, incredible food, and those smart toilets with multiple buttons I’ve never dared to press. You’ve probably also been marvelled at yourself. Japan is a notoriously hard country for immigrants to move to, meaning it has one of the world’s oldest, most homogenous populations and an economy struggling to grow.

Australia’s economy, like many others, has, for the past century, been built on immigration. It has helped drive innovation, increase multicultural ties and enabled us produce and earn more. My parents bought a home together back in the ’90s (I envy the price they paid back then), but I like to think their contribution to the country has been greater than the house they took off the market.

Millie Muroi is a business reporter.

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