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Can Australia Balance Migration Trends With Long-Term Housing Solutions?

Can Australia Balance Migration Trends With Long-Term Housing Solutions?

Australia’s housing market remains under immense pressure, with housing supply lagging behind population growth driven primarily by migration.

While new data from the Australian Bureau of Statistics (ABS) shows a slight decline in annual net overseas migration (NOM) to 454,400 in the year ending March 2024, down from the peak of 496,800 in December 2023, migration still accounts for 82% of Australia’s total population growth. This moderation provides a window of opportunity for governments to address systemic housing shortages, but is Australia prepared to act decisively to solve the problem?

With national rental vacancy rates hovering around 1.4% and housing affordability worsening in both capital cities and regional areas, the question remains whether policymakers can strike a balance between population growth and the infrastructure needed to support it. This article examines the implications of current migration trends and housing data, explores whether Australia is doing enough to bridge the gap, and identifies actionable solutions to align migration with long-term housing supply.

Table of Contents

  1. Migration Trends and Population Growth
  2. Housing Data 2024: The Real Impact on Affordability
  3. Policy Gaps: Why Migration and Housing Remain Out of Sync
  4. What Needs to Change? Long-Term Housing and Migration Solutions
  5. Summary

Migration Trends and Population Growth

Net overseas migration continues to be the dominant driver of Australia’s population growth. The latest ABS data reveals that NOM for the year ending March 2024 stood at 454,400, a 9% decrease from the previous December’s peak of 496,800. This decline is the first since borders reopened in late 2021, reflecting a slight slowdown in international arrivals and a steady rise in departures. Despite this drop, migration still accounts for the vast majority of Australia’s total population growth, which reached 563,200 people in the same period.

The states absorbing the bulk of these arrivals include New South Wales, with Sydney attracting the highest share of international migrants, followed by Victoria and Queensland. Together, these states host over 75% of new migrants. Meanwhile, regional areas and smaller states like South Australia and Tasmania struggle to attract meaningful numbers of migrants despite government efforts to promote decentralisation. This urban concentration places intense pressure on major city housing markets, which are already grappling with affordability and supply shortages.

Housing Data 2024: The Real Impact on Affordability

Australia’s housing market is still far from catching up with population growth. The rental market is particularly tight, with vacancy rates nationally at 1.4%, according to recent SQM Research data. Capital cities like Sydney and Melbourne are experiencing slightly higher vacancy rates of 1.5% and 2.0%, respectively, but this remains critically low compared to pre-pandemic averages. In Perth, the rental vacancy rate is just 0.6%, the lowest in the country, while Brisbane stands at 1.1%, reflecting similar challenges in regional areas and smaller capital cities.

Data from realestate.com.au reveals that median weekly rents have surged by over 12% year-on-year nationally, with some cities seeing even sharper increases. Sydney’s median rent for houses has hit $850 per week, up from $780 per week a year ago. Melbourne, though traditionally more affordable, now averages $620 per week for houses, up from $550 per week in 2023. Regional housing markets, which were once seen as affordable alternatives, have also been affected. Towns like Ballarat and Geelong in Victoria and Toowoomba in Queensland have seen rent increases between 15-20% over the past 12 months, making it harder for both locals and migrants to find affordable housing.

The housing sales market reflects similar trends, with prices beginning to rise again after a period of stability in 2023. According to CoreLogic, the median dwelling price in Sydney has increased by 4.5% in 2024 alone, reaching $1.1 million, while Brisbane and Perth have recorded increases of 3.2% and 5.1%, respectively. The combination of high prices and low rental availability has locked many Australians out of the housing market, while migrants face increased competition for affordable housing options.

Policy Gaps: Why Migration and Housing Remain Out of Sync

Despite clear evidence of housing shortages, Australia’s migration and infrastructure policies remain poorly aligned. While the Albanese Government continues to highlight migration as a key tool for addressing labour shortages and driving economic growth, the housing sector has failed to keep pace. Critics argue that migration forecasts have consistently underestimated the actual number of arrivals, leaving state and local governments unable to plan effectively for housing and infrastructure needs.

For example, the May 2023 Federal Budget predicted a NOM of 395,000 for 2023-24, but the actual figure exceeded this by almost 60,000 people. This consistent underestimation creates a lag in infrastructure development, particularly in housing construction. Building approvals have also declined significantly, with the ABS reporting a 7.2% drop in housing approvals in the year ending October 2024. Rising construction costs, labour shortages, and complex approval processes have further delayed the delivery of much-needed housing stock.

Additionally, efforts to decentralise migration through regional visa programs such as the Skilled Work Regional (Provisional) Visa (subclass 491) have seen limited success. Regional areas lack the employment opportunities and infrastructure needed to attract and retain migrants, leading most arrivals to settle in Sydney, Melbourne, or Brisbane. This urban concentration places even more pressure on housing supply in these cities, where rents are already unaffordable for many residents.

What Needs to Change? Long-Term Housing and Migration Solutions

Australia needs a comprehensive approach to synchronise migration trends with housing supply. Improving the accuracy of migration forecasts should be the first step. The Federal Government must invest in advanced data analytics and collaborate with housing experts to ensure migration policies are aligned with infrastructure development. Transparent forecasting will enable state and local governments to better plan for housing, transport, and public services.

Strengthening regional settlement programs is another priority. Regional visa schemes should be expanded with stronger incentives for migrants to settle in smaller towns. This could include financial benefits, greater access to services, and investment in regional infrastructure to create sustainable opportunities for new arrivals. Programs like the subclass 491 visa must be paired with tangible support for employers and industries in regional areas to drive employment growth.

To boost housing supply, governments need to fast-track planning approvals and incentivise private developers to build affordable rental properties. Increasing funding for social and affordable housing programs is essential, especially for vulnerable groups like low-income households and new migrants. Expanding public-private partnerships in housing and infrastructure projects could also help overcome funding and construction bottlenecks.

In the short term, renters need immediate protection from escalating costs. Rent caps, longer-term leases, and increased oversight of the rental market could provide some relief for households struggling with affordability while housing supply catches up.

Summary

Although annual net overseas migration has fallen slightly to 454,400, Australia’s housing market remains under immense pressure. Migration continues to drive the majority of population growth, with urban centres bearing the brunt of housing demand. Rental and housing prices are rising across the country, exacerbating the challenges faced by both locals and migrants in securing affordable homes.

The Federal Government must act urgently to address these challenges by aligning migration policies with housing and infrastructure development. Accurate migration forecasting, strengthened regional settlement programs, and a renewed focus on affordable housing construction are critical to balancing population growth with long-term sustainability. Without coordinated action, Australia risks deepening its housing crisis and undermining public confidence in its migration policies.

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