Immigration to Australia
In 2006, the Sydney Morning Herald reported on Macquarie Bank analyst Rory Robertson's analysis of Australian housing affordability. Robertson had criticized claims by then-Prime Minister John Howard that state government land release policies were the main driver of high house prices. He argued that a number of factors including high immigration, lower interest rates since the early 1990s, and investor activity, had a greater impact on housing costs. Robertson repeated this claim again in 2007 in an article from The Australian where he believed that high immigration and the propensity of new arrivals to cluster in the capital cities is exacerbating the nation's housing affordability problem. [21] [22]
The Productivity Commission Inquiry Report No. 28 First Home Ownership (2004) also stated, in relation to housing, "that Growth in immigration since the mid-1990s has been an important contributor to underlying demand, particularly in Sydney and Melbourne." [23] This has been exacerbated by Australian lenders relaxing credit guidelines for temporary residents, allowing them to buy a home with a 10 percent deposit. The RBA in its submission to the same PC Report also stated "rapid growth in overseas visitors such as students may have boosted demand for rental housing". [23] However, in question in the report was the statistical coverage of resident population. The "ABS population growth figures omit certain household formation groups – namely, overseas students and business migrants who do not continuously stay for 12 months in Australia." [23] This statistical omission lead to the admission: "The Commission recognises that the ABS resident population estimates have limitations when used for assessing housing demand. Given the significant influx of foreigners coming to work or study in Australia in recent years, it seems highly likely that short-stay visitor movements may have added to the demand for housing. However, the Commissions are unaware of any research that quantifies the effects." [23]
In a 2008 Senate report, some individuals and interest groups have also argued that immigration causes overburdened infrastructure. [24] [25]
However more recently in 2025, multiple studies have debunked the notion that immigration and foreign property purchases are significant drivers of Australia's housing crisis. Instead, experts point to factors such as limited housing supply, tax incentives for investors, and broader demand-side pressures as the primary contributors. [26]
A comprehensive study by the University of South Australia, published in March 2025, analyzed rental data from 2017 to 2024 and found no statistically significant correlation between international student numbers and rising rents. Lead researcher Professor Michael Mu emphasized that international students were unfairly blamed for the rental crisis, stating they were "thrown under the bus" and made an "easy target" for politicians. [27]
Supporting this view, a July 2025 paper by the Reserve Bank of Australia (RBA) concluded that the rapid growth in international student numbers post-pandemic did not substantially contribute to higher rents or inflation. The RBA acknowledged that while the increase in student numbers likely had some impact, it was not a major driver of the housing affordability issues. [28]
Further research by The Australia Institute, published in April 2025, support this view. Analysis of population trends shows that even during periods of low migration, house prices increased substantially, and Australia’s population is still below the level it would have reached had pre-COVID growth continued. The Institute identifies other factors as the main contributors to housing unaffordability, including insufficient construction of low-cost housing and rental properties, combined with a market favoring property investors. [29]
A 2025 Guardian article reported on modelling by Brendan Rynne, Chief Economist at KPMG, showing that slashing migration could paradoxically lead to higher house prices. In a thought experiment where population growth is reduced to natural increases only, Australia would have 29 million residents by 2035 instead of 31.2 million—a reduction of 2.2 million people. [30]
A smaller labour force would increase competition among employers for workers, raising wages by 7.5% and slightly lowering unemployment. However, reduced population growth would also strain Australia’s ability to fund essential services, particularly as the population ages, and would cumulatively increase house prices by 2.3% over a decade relative to the base case with ongoing migration. Rynne notes that lower demand for housing is outweighed by the shortage of workers available to build new homes, while higher wages contribute to inflation, eroding the benefits of increased pay. [30]
Overall, while migration is not a panacea for all economic challenges, Brendan Rynne emphasizes that a well-managed migration program is likely to provide net economic benefits over the long term. [30]
Foreign investment in residential property
In December 2008, the federal government introduced legislation relaxing rules for foreign buyers of Australian property. According to FIRB (Foreign Investment Review Board) data released in August 2009, foreign investment in Australian real estate had increased by more than 30% year to date. One agent said that "overseas investors buy them to land bank, not to rent them out. The houses just sit vacant because they are after capital growth." [31]
In 2015, an opinion piece by journalist Michael West claimed that many Chinese buyers were investing in Australian property and suggested that some of the funds may have originated from illegitimate sources. He cited James Tee, an ethnic Chinese property developer, who argued that the outflow of capital from China was accelerating due to the Chinese government's anti-corruption campaign. West urged closer scrutiny of foreign investment and stronger enforcement of existing laws to ensure that illicit money was not being laundered through the Australian property market. [32]
In 2021, the Guardian reported on a survey that found over 80% of Australians thought Chinese investors were driving up house prices. But CoreLogic's research shows foreign investment has been falling since 2014 and isn’t big enough to explain recent price rises. Instead, low interest rates, strong buyer demand, and limited housing supply are the main drivers. The survey’s lead author, Elena Collinson, said media coverage had made foreign investors an 'easy target," even though the evidence doesn’t support it. [33]
A 2025 poll, found that 69% of Australians polled supported a temporary 2 year ban on foreign investment in residential property, only 9% were opposed and 22% were unsure. A second question found that 47% supported a permanent ban, while 29% supported temporary ban and 23% were Undecided. [34]
As of 2025, most foreign investors are restricted to buying new or off-the-plan properties, not existing homes. Critics argue that extra stamp duties and surcharges discourage this investment, draining capital from new developments and worsening shortages. The Housing Industry Association (HIA) stresses that foreign investment does not drive demand but instead funds the construction of new homes. HIA Chief Economist Tim Reardon explained: 'Foreign institutional capital does not create housing demand. It creates supply, and Australia cannot build 1.2 million new homes in five years while taxing the capital that is necessary to build those homes." He further warned that taxing this capital reduces the supply of homes being built just as migration continues to surge and create demand — calling it 'the worst own goal in the myriads of housing policy mistakes." [35]
