Posted on December 22, 2023

Australia’s Housing Costs Have Hit New Highs

Mike Cherney and Stuart Condie, Wall Street Journal, December 13, 2023

Australian home prices just hit a high in what was already one of the world’s most expensive real-estate markets. Now, Australian officials say they have a plan that will help to make housing more affordable: curtailing migration.

A new policy, unveiled this week, will result in a 14% reduction in migrants over the next four years than would otherwise be expected, according to government forecasts. The country of 26 million absorbed a record of some 510,000 net arrivals in its most recent fiscal year, more than 20% above what officials had projected seven months ago.

Australia has been one of the countries most affected by record global migration following the relaxation of Covid-era travel rules. While that has helped sustain economic growth in the face of elevated inflation, rising interest rates and supply-chain problems, many newcomers are landing in cities where housing is in short supply, helping push up rents and propping up home prices despite sharp increases in borrowing costs.

Australia isn’t alone in seeing housing costs escalate against a backdrop of higher migration. In the U.K.—which just announced its own plan to substantially limit newcomers—annual inflation in rents in October hit its highest level since records began in 2016, and has accelerated for 26 consecutive months. {snip}

Australia’s central bank has raised interest rates at a record pace since May 2022, but the average national property price is still up by about 7% over the past year, to the equivalent of nearly $500,000 in November. The government now wants to tighten controls on lower-skilled temporary visa holders and students, while funneling more migrants with skills in areas such as engineering, teaching and nursing away from cities including Sydney and Melbourne, and into areas where rents and property prices are lower.


A labor shortage after the pandemic in industries from hospitality to healthcare prompted some Australian employers to recruit workers from overseas. But the new migration plan has broad support. Unions said it would prevent businesses from using temporary migration to hire overseas cheap labor instead of training locals, while industry groups said the focus on skilled migration will help employers attract the specialized workers they need.


Australian officials said they want to reduce so-called “visa hopping,” in which students and other migrants already in the country keep getting new temporary visas, effectively letting them stay indefinitely even if they have little chance of getting permanent status. Other rules would be tightened for student visas, including to make clear that most international students will return home after their studies.

“There is great concern about the correlation between housing shortages and the scale of people coming in on temporary pathways,” said Lesleyanne Hawthorne, an emeritus professor at the University of Melbourne who has focused on international skilled migration. “There is a saying in migration, that nothing is as permanent as temporary migration, and Australia wants to get out of that situation.”


Many people, even professional couples on good salaries, are moving farther from their jobs to find somewhere that they can afford to live, said Shelley McGonigal, who runs a Brisbane-based relocation agency for new migrants and Australians moving interstate.

“As a relocation agent, I’m like: ‘keep increasing, keep increasing migration,’” McGonigal said. “But the other really sensible part of me says it can’t continue.”