Key Points
- The Institute of Public Affairs says Australia will have a net shortfall of 252,800 houses.
- A key contributor is the Government's inability to 'rein in the influx of migrants', it said.
- But some economists say this is misleading.
A conservative-leaning think tank says an "unprecedented flow of migrants" to Australia had exacerbated the country's housing and rental crisis, though the claims are disputed by others as being misleading.
The Institute of Public Affairs' report said the Government's inability to "rein in the influx of migrants" after international borders reopened following the COVID-19 pandemic was a key contributor to housing supply shortfall.
The report has been labelled "rubbish" by managing director of the Australian Housing and Urban Research Institute, Michael Fotheringham, who told SBS News it doesn't mention key factors that, he believes, have led to chronic .
"Migration is one of the ways we've actually built up our residential construction workforce and could, theoretically, help to increase the number of new properties and ease rental prices slightly," he said.
The report from the IPA refers to "1.755 million new migrants expected to stay in Australia by the year 2028," which appears to be arrived at by adding figures from 2021-2022 all the way up to 2027-2028.
It said: "The consequences of the unprecedented inflow of international students are not just felt by Australians but also the students themselves, whose educational experience suffers from the housing shortage.
"The consistent message from recent international students is that the housing crisis they encountered upon arrival in Australia was not at all what they had expected.
"Many were enticed by the promise of a better life in Australia by their agents and educational institutions – and they would have had second thoughts had they known they would face the prospect of homelessness upon arrival."
The IPA has previously said the issues were complex, that there has been "no coordination from within government" and that it was imperative to have infrastructure in place "before we’re having these big migration programs being expanded".
Migration plummeted when Australia’s borders were shuttered in early 2020, just months after the COVID-19 virus arrived, and remained closed until November 2021.
By the time the borders reopened, net overseas migration compared to what was expected before the pandemic.
The government estimates there were 590,566 people in Australia on student visas in between January and April this year.
"It's really scapegoating to blame international students and migrants," Anne Flaherty, an economist at property data company PropTrack told SBS News.
The number of rental properties in Australia was shrinking before international borders were reopened, and therefore the claims don't stack up, she said.
How bad is the rental crisis in Australia?
Rental affordability reached its lowest level in nine years in May, according to ANZ bank and property data firm CoreLogic, meaning renters are handing over nearly one-third of their income to service a new lease.
Simultaneously, rent prices in capital cities rose 17 per cent from the June 2022 quarter to the June 2023 quarter, and 11.8 per cent nationally, according to PropTrack.
The IPA claims housing is in critically short supply and "a key contributor to this housing crisis is the Commonwealth Government’s inability to rein in the influx of migrants."
It's correct that housing is in short supply, Fotheringham said, but IPA's analysis "completely ignores that there's a whole sector of specialist accommodation for international students that sat empty during the pandemic," he said.
Why is Australia in a rental crisis?
The factors driving Australia's rental crisis have been brewing for a long time, Fotheringham said.
One issue he cited is there are fewer people living in each dwelling, which is contributing to a lack of supply. This in turn is driving up prices.
Also, landlords who have outstanding mortgages may be paying higher interest rates on them and passing those costs onto tenants.
Data shows the number of properties available for renters has decreased because property investors are selling to owner-occupiers, Flaherty said, adding she thinks it's the major reason renters are facing tough times.
"Property investors do not have the same incentives as they used to," she said.
"So what we've been seeing for five years now is that there have been more property investors selling their properties than property investors purchasing properties."
She said once property investment becomes disincentivised, it reduces the total pool of properties available nationally.
, as well as people moving around within Australia, have flow-on effects of driving up rental prices, economists say.
Source: SBS News
"There's also a shift to people from the southern states up towards Queensland and southeast Queensland in particular, it's been hit by an influx of interstate migration," which increases demand in multiple markets, he said.
How can we fix the rental crisis in Australia?
Building more properties would ease pressure somewhat, but the construction industry has been hit with a raft of supply chain and workforce problems, Fotheringham said.
Source: SBS News
"One of the biggest things we can do to improve the lives of all Australians is to improve social housing supply, because the competition for spaces is increased by the lack of a social housing system," Fotheringham said.
The government's $10 billion housing bill includes planning for 30,000 social housing homes over five years, but has stalled in the Senate due to opposition from the Greens.
Flaherty proposed the government incentivise build-to-rent projects, which are typically apartments built by developers which can only ever be offered to renters.
"It's often the kind of product that works well for tenants. They have more security of tenure and don't have to be worried about being kicked out," she said.
It's also "absolutely vital" there is enough housing for migrants coming to Australia, she said.
"We know around 70 per cent of migrants tend to be renters when they come to Australia.
"So ensuring that we keep up a growing supply of rental properties is going to be really important because new migrants and international students have an enormous contribution to make to our economy."
