Everyone agrees there’s a housing crisis. House prices and rents have risen far beyond inflation, increasing unaffordability for many in society. Increasing stress, decreasing lifestyle choices and worse, homelessness. But nobody agrees on the cause. Or the solution.
The most recent villain for the LNP is immigration, the common go-to for the aggrieved. The Other. One Nation built a whole party on the back of it. But immigration has next to nothing to do with the housing crisis. It didn’t cause it; and it doesn’t exacerbate it. Au contraire, it is actually a solution.
Let’s look first at the real causes, and where the blame is levelled depends on the accuser.
First cab off the rank, everyone agrees there’s “a lack of supply”. Except there isn’t. With 11 million dwellings and 10 million households there’s one million empty on census night. The problem is one of distribution. There will always be houses that are not being occupied, for quite reasonable reasons, such as renovations. But there’s also 350,000 or more that are short term rental (AirBnB). For the Greens that means banning or limiting short-term rentals. But that doesn’t look likely any time soon.
Second, Labor and the LNP claim it’s a lack of approvals. The Feds and States blame councils for not approving enough, and not fast enough. In particular, not developing regulations to encourage increasing densities of housing. Which is true, but it’s caused NIMBYs not immigrants. Partially fixed by better, usually state-based, planning rules. And better fixed by taking away planning altogether from Councils. Not any time soon.
Thirdly, building costs have spiralled, as have builder bankruptcies. Materials went up post Covid to cover shortages and losses, and sub-contracted labour looked to capture lost wages from those bankruptcies. Not to mention their own supply and demand – trades are in short supply and are demanding higher wages. In NSW the exigencies of the Building Commissioner has affected both ends: more upfront documentation costs and more compliance regulation. Prices aren’t coming down any time soon.
Fourthly, the Greens and others accuse developers of land-banking, that is sitting on land (and approvals) until bigger profits are possible. Which is also true. Except the recent increases in interest rates and building costs (and slow approvals) means that, not only are the profits lower, in many cases the financial returns aren’t there at all. So, they wait for better times, not arriving any time soon.
So, we’ve got a problem with limited housing options and little prospect of solving any of those constriction issues in the near future. The federal and state governments are pledging to spend lots more money to address the ‘lack of supply’, particularly in social housing. But given the four choke points above, is there any prospect that the slow rate of new-builds will pick up? Absolutely not, particularly given the chronic shortage of trades. Maybe 30% less than we need to build the government’s targets.
Many in society can’t get the house they want, or can afford. We have an artificially created supply issue, that will not be solved by building more houses in a hurry.
The flip side is that demand is increasing. But do immigrants add substantially to that demand? The answer is absolutely not.
The largest cohort is the temporary migration of tertiary students. The universities depend on foreign students for income in order to run the university. Students require a very different form of housing to permanents. With no rental history, no time to shop around and intending short stays, a whole different form of housing has arisen close to universities. Large private housing suppliers, such as Scape (formerly Urbanest) and Iglu, responding to demand, stepped up extensively in the last 15 years.
They've built high-rise buildings dedicated to student accommodation because it makes money. Co-living in intention, they feature tiny studios of 20 to 25 sqm, adapted from boarding houses, provide communal study and play spaces (high WIFI booths and pool tables). Entirely focused on foreign, mostly Asian, students they charge $500-$700 per week. Those migrants are not increasing the general housing demand.
The second biggest cohort are family reunions. Most of those migrants will stay for the first two to three years, or longer, with an existing family, given they come from cultures that would see 2-3 people in a house as empty, and would think nothing of a multi-generational home. As discussed last week, the quickest way to solve the current crisis is to have more people per home. Which is what immigrants do.
The next cohort are selected trades and professions. And this is where immigration is the solution, not the problem. Rather than chasing yoga instructors and dog-walkers, the government would do better to bring in qualified building trades –increased populations in that sector would help supply and lower wage pressures. We are so short of expertise it will take twenty years of dedicated TAFE to rebuild the workforce. Easier to import it.
Once our immigration was focused on ‘building the country’. Snowy Mountains Hydro. Jennings Germans. The Sydney Opera House. Every concreter and plasterer for forty years. Time to do so again.
Housing and immigration is a non-issue, if handled well. Three simple rules. Students to live in dedicated buildings (which we need to expand). Family reunions should be within existing homes, at least initially. People who can help build the houses should be preferred as migrants. That’ll solve the housing issue, not worsen it.
Podcast: A further exploration of these issues is in the A&D Podcast: Episode 210: Tone Wheeler on why immigration is not the reason behind our a housing problems.
Title image: Trailer from the film ‘They’re a Weird Mob’, based on the book by Nino Culotta (pen name of John O’Grady). Hasn’t aged well in PC terms, but documents an era when we housed double the population in less than 30 years.
Next week: Why three-storey red-brick walk-up flats are the most sustainable dwellings.
This is Tone on Tuesday #215, 25 June 2024. It was written by Tone Wheeler, architect / Adjunct Prof UNSW / President AAA. The views expressed are his. Past Tone on Tuesday columns can be found here. You can contact TW at [email protected]
