There is a strong need for the new Australian leadership to encourage the resurrection of immigration levels to boost housing demand in the country.
BuyersBuyers CEO Doron Peleg said the latest record on unemployment, which fell to its lowest record since 1974 to 3.9%, signal the need for stronger levels of immigration.
“The headline unemployment rate is the lowest we have seen in half a century, and in some parts of the economy, this has led to skills shortages, such as in retail, nursing, and aged care roles,” he said.
“Of course, skills shortages are not uniform in nature, and not every sector has been impacted by border closures to the same degree.”
Australian Treasury’s Budget papers project a steady return to net overseas migration of 213,000 by financial year 2023-24. This represents a projected total population growth of more than 350,000 per annum.
The Treasury’s Intergenerational Report in 2021 also assumed that the population growth would be more sluggish than the previous forecasts due to the impacts of the pandemic and a lower fertility rate.
Despite this, the report still expects the population to reach 38.9 million by 2060, which is a 50% increase from today’s numbers.
“Given forecasts have consistently underestimated the reality over the past 20 years, it’s entirely possible that the population could grow more quickly still,” Mr Peleg said.
Return of immigration to revitalise housing demand
BuyersBuyers co-founder Pete Wargent said the potential return of immigration will underpin housing demand over the coming decade.
“Net overseas migration has been negative through much of the pandemic, so even after accounting for natural population growth of around 136,000 over the past year, the population growth rate in Australia has dropped to exceptionally low levels of around 0.3%,” he said.
For context, the average population growth rate in Australia between 2006 and 2020 was 1.7%. Mr Wargent said a return to even 1.5% growth would been an increase of nearly 400,000 per annum.
“In turn, creating a huge demand for housing at a time when construction costs are sky high, and stock levels are extremely tight,” he said.
The current skills shortage should be enough to urge the government to push for the revival of immigration.
“There are plenty of anecdotal indicators of staff shortages at retail outlets, with many shops advertising urgently for new applicants to fill vacant roles, while surveys of job vacancies continue to report exceptionally high rates of vacancy,” Mr Wargent said.
“It’s likely that the new government will look to increase the number of skilled migrant workers to address labour shortages, and residency may be offered to temporary visa holders to boost permanent settlement.”
Mr Wargent said there could also be changes to how Australia offers residency to international students, given the increasing competition from Canada, the United Kingdom, and other key education hubs across the globe.
“Australia has been seen as a popular, wealthy, and safe destination for migrants over recent decades, and despite cost-of-living challenges, the new government should comfortably be able to fill an increased migration programme if that’s what it chooses to do,” he said.
“It wouldn’t be a surprise to see population growth returning to above 350,000 per annum fairly quickly, and a million new people every 3 years requires a great deal of investment in housing”.
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