Housing crisis: Urban planning expert says cutting immigration is the key to slowing house price growth

Australia’s housing affordability crisis won’t be solved unless immigration is dramatically cut, a leading urban planning expert says, arguing entire new cities would have to be built to address the issue.

In the year to November, 476,960 migrants arrived in Australia on a permanent and long-term basis, preliminary Australian Bureau of Statistics population data showed.

Those early numbers exaggerate the numbers of returning international students, coming and going from Australia multiple times, which explains why they are much higher than the 305,600 net overseas migration intake for the last financial year.

But the refined population data shows immigration running at triple the annual pace of the early 2000s before the mining boom.

With national house prices last year growing by 9.3 per cent, Griffith University urban planning lecturer Tony Matthews said slowing down property price growth would be achieved via cuts to immigration instead of a focus on boosting supply, with fertility at a record low.

“We cannot improve affordability unless we radically reduce demand and that means having a hard look at the population of the country and how fast it’s swelling year to year and where that growth is coming from,” he told The Nightly on Monday.

“Most of that is not coming from internal reproduction, it’s coming from migration: tricky political questions are outside the discussion at the moment.

“The demand is so high that we can’t deliver the supply to meet the demand without building entirely new cities.”

Australia’s median capital city house price last year grew by 9.1 per cent to $1.127 million, based on Cotality data.

Sydney’s mid-point house price is very unaffordable at $1.587 million and the city’s median unit price of $901,314 is beyond the reach of the average, full-time worker earning a low, six-figure salary.

Unlike Melbourne, Sydney is unaffordable even for those wanting an apartment.

Sydney’s middle apartment price is also significantly higher than Melbourne’s affordable mid-point apartment price of $640,391 owing to high-rise unit developments near the city in places like Docklands on the Yarra River.

In a Melbourne bayside suburb like St Kilda, a unit typically costs just $537,891, making something near the city attainable for an average-income worker.

Nothing like that is possible within 20km of Sydney’s city centre unless someone bought a cramped, one-bedroom unit in an outer suburb.

For those wanting to live near the city in an eastern suburb like Woollahra, the median apartment price is $1.571 million, which is significantly more than Australia’s national middle house price of $980,000.

Being just 4km from the city centre, a unit in the area between Edgecliff and Bondi Junction train stations costs 50 per cent more than a house in an outer suburb of south-west Sydney, and about the same as a house in a middle-distance suburb.

The NSW Government wants to build 10,000 new units at Woollahra, in Sydney’s east, with a new train station, in a suburb with views of Sydney Harbour, making high-rise developments a fraught issue.

“Ten thousand units divided into millions of new people won’t go very far,” Dr Matthews said.

“The challenge then becomes the availability of land.”

NSW Premier Chris Minns suggested it would give younger people more choices near the city.

“This is not going to solve Sydney’s housing affordability challenges in one hit,” he told reporters earlier this month.

“What people have to appreciate when it comes to urban density, places closer to the city is that experts tell us it has a domino effect.

“A lot of these places will be bought for lots of money close to the city. What it will also do is hopefully free up more opportunities for people to buy places in the next suburb out and the one after that.”

Australian building approvals are falling well short of the 240,000 needed a year to produce 1.2 million homes over five years.

But in the year to November, just 195,523 new residential homes were approved.

“What’s happened in Sydney for a long period of time is because we’ve built such a low number of houses, stretching back more than 20 years, there’s been atrophy when it comes to progress either up the scale or down the scale,” Mr Minns said.

Even if the Woollahra developments included social and affordable housing, chances are they would be sold off for top dollar by a future government, especially if they were in a nice area.

That’s what happened with the Sirius housing commission flats at Circular Quay and ones at nearby Millers Point during the 2010s.