In 2009, the former Rudd government decided to allow temporary migrants to acquire Australian homes.
The subsequent surge in temporary migration, especially among international students (with China accounting for the largest proportion), increased the demand for residential properties in Australia from foreign nationals.
Opposition leader Peter Dutton promised that, if elected, he would ban foreign investors and temporary residents from purchasing existing homes in Australia.
Resolve Political Monitor reported strong public support for the policy. In total, 69% of respondents support the policy, with 73% of voters in marginal electorates supportive.
As expected, the property lobby has pushed back against the policy, claiming that it would stifle new home construction.
Nerida Conisbee, chief economist at Ray White Group, claimed that large segments of Melbourne, Sydney and Brisbane probably wouldn’t exist if not for foreign investors.
“New buildings can’t get off the ground without a certain number of presales”, Conisbee said. “Australians aren’t as used to buying off-the-plan as foreign investors are, so we’ve relied on foreigners to get projects started”.
“Foreign investment into Australia is already very low at the moment. It’s also restricted to new property only, so that investment is able to contribute to new housing supply”.
“Foreign investors aren’t really that active at the moment… If things became even more prohibitive, then yes, it would put them off”, she said.
Peter Dutton’s ban would only apply to established properties, not new properties. Therefore, I fail to see Conisbee’s point.
If anything, precluding temporary migrants and foreign investors from buying established homes could push them into purchasing new properties instead, thereby stimulating supply.
Professor Alan Morris from the Institute for Public Policy and Governance at the University of Technology Sydney complained that Dutton’s “proposed policy is incredibly minor tinkering at the edges that won’t do much”.
“What’s required is significant change. We need to build a lot more social housing. We need to look at the entire tax regime surrounding property investment. We need to reorient the entire housing market to being a source of shelter, not of wealth”, he said.
While foreign buyers purchasing existing homes are not the major driver of house prices, they do have a stimulatory impact.
The main problem with Dutton’s policy is that the ban on temporary residents buying established homes would only be temporary, running for two years only.
Indeed, the Resolve Political Monitoring polling showed that 47% of eligible voters want the ban to be made permanent.
Why should non-permanent residents be permitted to own pre-existing housing in Australia? They are not adding to supply and they compete with locals for stock.
Moreover, given they are supposed to be in Australia on a temporary basis, they should rent. If they transition to permanent residency, then they can own an established home.
The main solution to Australia’s housing crisis is to run a much smaller immigration program that is focused on quality over quantity.
The Centre for Population projects that Australia’s population will grow by 4.1 million people over the coming decade, with Melbourne (one million), Sydney (900,000), Brisbane (500,000) and Perth (500,000) receiving most of this growth.
This strong population growth will ensure that housing demand continues to run well ahead of supply.
December’s True Issues survey by JWS Research revealed that 78% of respondents agreed that “housing access and affordability has now reached the point of being a national crisis”.
Three-quarters (67%) of respondents believed that “Australia should reduce its migration intake until new supply of housing eases the current shortage”. More than half (56%) also believed that “Australia’s population is increasing too quickly”.
Polling by Resolve Political Monitor likewise showed that 64% of respondents want “a reduction in the number of migrants to Australia”, with just over half (51%) also wanting “a reduction in the number of foreign student visas”.
Peter Dutton should abide by the wishes of the Australian people and significantly cut both permanent and temporary migration.
Sadly, the Coalition’s election platform on immigration proposes to temporarily cut the permanent migrant intake only for two years.
The Coalition’s pre-election immigration policy
So under Dutton, Australia’s housing crisis and overall liveability will continue to deteriorate as the nation’s population grows faster than the supply of housing and infrastructure.
