Australia’s housing market faces increasing pressure as recent budget projections indicate a significant rise in migration over the coming years, raising concerns about housing affordability and supply for younger Australians.

Treasurer Jim Chalmers’ budget forecast an additional 55,000 migrants over the next two years beyond earlier estimates, bringing the total expected arrivals to more than 1.22 million by 2030. This increase is attributed primarily to fewer departures from Australia, rather than a fresh surge in arrivals, according to the Treasurer.

AMP chief economist Shane Oliver highlighted the link between migration and housing demand, estimating that each three new migrants require one new home. Oliver noted that Australia needs to construct approximately 100,000 new homes annually just to accommodate overseas migrants. However, despite building around 180,000 new homes a year to meet overall population growth, migration, and property demolitions, current construction rates remain insufficient to address the existing shortfall. He warned that the extra 35,000 migrants per year necessitate an additional 10,000 homes annually, complicating efforts to reduce the housing deficit. Oliver suggested that either construction rates must increase significantly or migration levels be curtailed to relieve pressure on the market.

The post-pandemic period saw a surge of nearly one million migrants arriving within two years, contributing to a shortage estimated at 300,000 homes. This growth in migration has drawn criticism from political figures such as One Nation Leader Pauline Hanson, who argued that mass migration has driven housing prices upward, calling for tighter controls on migration numbers. She emphasised that her stance is not anti-immigration but focused on regulating the scale of arrivals, noting the existing target of 130,000 new entrants annually.

In response to housing and skills shortages, the government allocated $85 million to the Department of Employment and Workplace Relations to streamline and accelerate skills assessments for migrants. The aim is to attract better educated, higher skilled, and younger migrants who can contribute to sectors facing labour shortages, including construction.

Economists and industry leaders expressed mixed views on the effectiveness of these measures. KPMG chief economist Brendan Rynne expressed optimism that faster skills recognition might help integrate migrants into the construction workforce, potentially easing supply-side constraints. However, Master Builders Australia chief executive Denita Wawn stated that the budget’s projection of adding 4,000 skilled workers annually through this program falls far short of needs. Citing Infrastructure Australia and BuildSkills Australia reports, she highlighted a national infrastructure workforce gap of up to 300,000 workers by 2030 and an additional 116,000 workers required in residential construction alone. Wawn criticised the current skilled migration system as fragmented, costly, and slow, calling for a more effective migration pathway that utilises skilled migrants already in Australia and better aligns with labour market demands.

Urban Taskforce chief executive Tom Forrest emphasised the economic benefits of strong migration, noting its role in supporting an ageing population through increased tax revenues. He underscored the importance of targeting the skilled migration program to focus on the construction sector, where shortages persist across various trades and skills.

Conversely, Institute of Public Affairs researcher Dr Kevin You argued that the ongoing policy of mass migration exacerbates housing unaffordability and dampens productivity. He suggested that stopping or reducing migration would be a more effective approach to addressing the housing crisis and improving economic outcomes, criticizing the budget for increasing migration numbers rather than restraining them.

As Australia balances the economic benefits of migration with the challenges of housing supply and workforce capacity, the debate continues over how best to manage migration policies and address the nation’s housing affordability issues.