Reasons for the recent slowdown
The earlier peak in Australia’s latest population cycle indicates a slowing in the population growth rate, which taken in isolation is a negative for housing demand. This slowdown is occurring at the same time as Australia is losing its competitive edge in attracting skilled migrants. One factor is the sustained, strong recovery in the US economy, as well as relative improvements in economic conditions in the EU, Canada and New Zealand.
Changes were made by the federal government in 2017 to skilled worker visas (a form of temporary visa that can lead to permanent migration). This is already seeing a reduction in the amount of skilled-labour workers choosing to move to Australia.
In a significant difference to the policy introduced by the Labor government almost a decade ago, the annual cap of 190,000 people on permanent migration is not binding. The government can now choose to issue fewer visas than this number per year. In 2016/17 there were 183,608 permanent migrants. Figures released in late July revealed that in 2017/18 this number dropped to 162,417.
Another factor in the slower growth is that the mini natural population boom Australia experienced in the 2000s after the Howard government introduced the Baby Bonus has completely run its course.
Implications for housing
Despite the slower growth, the population continues to rise. For many years there has been no nationally coordinated strategic response from state and federal governments to the steady boom in population. Housing, infrastructure and other services like health and education are not keeping up. As a consequence resources remain stretched to varying degrees across our major cities. For most Australians, this reality is what impacts their day-to-day lives – the pressure of more people living in our cities and relying on the existing infrastructure and services.
A focus by the states on supporting higher levels of housing supply has been evident in recent years with supply meeting demand for the first time in many decades. However, many more years of stable supply are needed to make up the historic shortfall and reach a true equilibrium.
At HIA’s National Policy Congress in May, members recommitted to supporting a measured approach to immigration and hence population growth, adopting a revised policy position on population and immigration.
Reaching the milestone of 25 million Australians will bring additional attention to population issues, and the public focus is expected to remain strong in the lead up to a federal election, this year or next. There are clear economic benefits to a well-designed and implemented immigration policy.
In summary: HIA’s policy position on population and immigration
• Australia should promote and maintain a population growth rate sufficient to secure ongoing growth in Australia’s economic performance, workforce capacity, national productivity and standard of living. To this end, it follows that caps and limits need not be placed in categories such as skilled and business migration.
• Australia’s population growth policies should target working-aged skilled migration and business migration so as to mitigate the rate of decline in the proportion of our working-aged population compared to those aged 65 and over.
• HIA supports a managed migration program that delivers adequate skilled migrants in construction and building professions and trades to meet Australia’s ongoing housing needs.
• For the residential building industry, employer sponsorship rules should be contemplated that allow industry groups to sponsor contractors in the residential building industry.
• The residential building industry should be consulted in the development of skilled migration programs to provide guidance on the verification of overseas skills, licensing and qualification benchmarks.