Will Increasing House Prices Stop Immigration?

Guest blogger Graham Currie has over 30 years experience in the financial planning industry.

A combination of a rapid increase in population and a severe shortfall in the supply of housing is the main driver of recent surges in the price of houses. We are now at the point where housing affordability is a major problem. First home buyers are being priced out of the market and even existing home buyers are being forced to borrow more and more to upgrade to a bigger and better home.

A major part of the population growth comes from high immigration numbers, but will they keep coming if the cost of buying or renting housing becomes prohibitive?

At what point does it become impossible for migrants to afford to come to Australia? 
Perhaps that depends on their country of origin and the living conditions there.

Governments seem to want a reasonable level of population growth to satisfy labour shortages and help fund financial support for an even ageing population, but many are starting to question the wisdom of a 62% increase by 2050 to 35 million people.

Over the last 40 years population growth has helped us grow our economy and even avoid a recession during the Global Financial crisis. 

Recent developments have seen the Government adopt a harder line by more than halving the list of valued occupations and “would stop anyone subverting migration rules by studying low value education courses in Australia”.

BIS Shrapnel says annual net overseas migration will fall from 299,000 in 2009 to 240,000 in 2010, 175,000 in 2011 and 145,000 in 2012.

A combination of Government policy and the economic reality of living in Australia may start to ease some on the pressures on housing affordability.

Graham Currie

Principal - Eliza Property Analysis

graham@elizapropertyanalysis.com.au

www.elizapropertyanalysis.com.au