The housing industry’s “Catch 22”

The Housing Industry Association has called on the Australian Government to increase the number of skilled workers from overseas in order to achieve the National Housing Accord’s goal of building 1.2 million new homes, but this will only result in a “Catch 22” issue.

The catch is that a policy that encourages larger numbers of skilled migrants to migrate to Australia also increases the demand for homes to house them.

Such a scheme will only work if most of the new arrivals are employed in the housing construction industry.

But will they be?

Most skilled migrant arrivals will not work in housing

The Government seems intent on sabotaging its National Housing Accord goals with its other new programs, such as the push for local manufacturing under the Future Made in Australia program and a proposed integrated clean energy system to be developed under the Australian Industry Energy Transitions Initiative.

Rather than encouraging skilled migrant arrivals into the housing construction industry, these programs will do the opposite.

They will create new employment opportunities for skilled migrants in industries such as renewable energy and critical mineral production.

As a result, we are likely to see further increases in the demand for housing, but not the supply.

The rate of new housing construction is falling

And while the demand for new housing, especially for rentals will continue to accelerate, the rate of building completions is slowing down.

The latest ABS data (released last April) reveals that the number of new units and townhouse completions fell by 25% in February, and by a huge 17% over the last 12 months.

Our governments are punishing builders and investors

While material shortages and escalating costs are also being blamed for the construction slowdown, our local and State governments are not immune.

Their policies are discouraging the builders, developers and investors who create new rental accommodation by slugging them with new and higher contributions, levies and taxes.

Rather than chasing developers and property investors for more money, governments should be encouraging housing construction and investment.

There’s no sign of this occurring, and current government policies at all levels can only lead to an escalation of asking rents, especially for medium and high-density housing in the areas where new arrivals prefer to live.

No amount of landlord or builder bashing will solve this issue.

About John Lindeman John Lindeman has well over a decade of experience researching the nature and dynamics of various types of assets at major data analysts and is a leading property market researcher, author and commentator. For more information visit Lindeman Reports.