Record Immigration Adds To Australian Housing Woes

Record Immigration Adds to Australian Housing Woes

By Phil Mercer
14 August 2008

Real estate experts warn Australia faces an acute shortage of affordable housing as immigration reaches record levels. There are estimates that Australia needs to build an extra 40,000 new homes a year simply to cope with current demand. From Sydney, Phil Mercer reports.

Australia opens its doors to about 300,000 new migrants next year as part of a plan to address a chronic lack of workers. That means the country will see its highest immigration flow in more than 60 years.

An army of temporary and permanent settlers will be granted visas as part of a government effort to sustain a decade-and-a-half of economic growth.

There are three major strands to Australia's migration program: skilled workers, family reunions and humanitarian migrants.

The skilled component is at unprecedented levels, with qualified migrants being recruited in vast numbers from traditional areas including Britain and New Zealand, as well as emerging nations such as China and India.

In demand are accountants, engineers, computer professionals, health care workers and many workers in skilled trades, such as construction workers.

Such an influx of new migrants puts pressure on Australian society and has helped create a housing crisis as demand for inexpensive accommodation in major cities outweighs supply.

Demographer Bernard Salt says Australia is struggling to cope with the expanded immigration program.

“During calendar 2007 the Australian continent added 332,000 people,” Salt said. “Never before in our history have we added that number of people to our population base. 330,000 people per year is a rate and pace that we're not really comfortable with. We're used to growing at the 220, 230,000 per year. Our systems, our infrastructure, our culture can cope with that. We're un-used to traveling at this pace.”

Thousands of Australians find it hard to buy or rent affordable homes, a problem exacerbated by decade-high interest rates, increasing land prices and taxes.

The government recently began a program to add 50-thousand rental properties for low-income earners to the market. Real estate experts, however, say it will take at least four years before such measures help make housing more affordable.

They say an average wage earner in Australia will struggle to buy an apartment or house in a country where housing inflation has been rampant in recent years, although does show some signs of easing.

The rental market, however, remains strong; a shortage of properties led to double-digit rent increases in the past year.