Immigration cuts hurting housing market: Savills

Immigration cuts hurting housing market: Savills
Immigration cuts hurting housing market: Savills

The housing markets of Sydney, Brisbane and Melbourne are facing significant pain over the coming years from the government’s decision to drastically cut migration numbers, according to Tony Crabb, national head of research at Savills.

Crabb says the policies are been driven by politics – xenophobic fears in Western Australia, the west of Sydney and Queensland – rather than based on sensible policies and the needs of the economy.

“We should be making it easier for migrants to come here – most definitely. Over the coming decade more people will be leaving the working force then entering it putting pressure on our health care system and there will be less taxpayers to pay for it all,” he says. 

The immigration cuts – about 200,000 a year, according to Crabb – come at a time when demand for migrants exceeds supply, unemployment sits at just 5%, Australia is faced with skilled labour shortages, and countries in the Western world have unemployment as high as 20%.

 

“Immigrants are responsible for snapping up many of the house-and-land packages in the new housing estates as well as existing properties, all of which flows back into the economy in the form of credit provided for bank and demand for retail goods,” Crabb says.

The decline in population growth has also been noted by CBA economist Michael Blythe.

In a recent econ0mic note titled “Manning the barricades” Blythe said population growth was one of the factors that had helped protect the Australian economy during the 2008?09 financial crisis

“The support from strong population growth has gone,” he wrote. 

According to Crabb, the decline in migrants has also played a much bigger role in the decline in retail turnover, which has been largely ignored as everyone focused on the role of the internet.

“[Immigration] is the elephant in the room," Crabb says. 

“No one wants to talk about it, but we have slashed immigration by 200,000 people a year. That equals 70,000 houses, 100,000 cars, 70,000 washing machines, 70,000 dishwashers, and 150,000 beds. Never mind linen, crockery, cutlery, food, clothing and everything else. 

“That’s around $5 billion to furnish a house, and feed and clothe an average family per annum and that’s without adding additional retail expenditure involved in the construction of 70,000 houses, which on current values would be worth circa $400,000 each. 

“No wonder retail is in the doldrums,’’ he says.

Crabb says the cost to the economy, and the retail sector in particular, would be ongoing as the nation’s construction industry began to feel the pinch.

“It will be the housing sector which will feel it next as it starts to clear the workload from the stimulus package of 2009/10,’’ he says. 

“We need to take a comprehensive look, and with some urgency, at what is required to shore up our labour force. There are countries all over the world where well educated people are unemployed – we need them here, now. 

“If the federal hovernment wants to take some action to help retailers and at the same time stimulate our two-speed economy, then they could do worse than take a serious look at this issue,’’ he says.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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