Current Immigration Levels and It's Impact On Housing

Here’s a comprehensive overview of how current immigration levels are affecting Australia’s property market, covering both the home buying and rental sectors, and what experts are saying:

Key Impacts of Immigration on Housing

1. Demand Surge and Supply Shortfall

Net overseas migration (NOM) hit record highs of around 536,000 in 2022–23, and 446,000 in 2023–24, which are well above historical averages of ~200–250k.

In the same period, fewer than 600,000 new homes were built, resulting in a growing housing deficit.

Analysts estimate about 60,000 fewer new dwellings are built each year than needed to match population growth.

2. Rental Market Pressures

Vacancy rates have plunged to 1.0–1.6% in major cities which is far below the balanced threshold of 3–4%.

Rental prices have soared 10–35% increase in recent years. A study estimates around one-third of rental price increases over 20 years are migration-driven.

International students and recent migrants predominantly rent when arriving, intensifying competition for limited rental stock.

3. Home Price Inflation

Immigration significantly increases home prices, especially in cities like Sydney, Melbourne, Brisbane where most migrants settle (over 50% land in Sydney/Melbourne alone).

One study found a 1% population increase through immigration in a postcode correlated with ~0.9% higher property prices.

Time-series modelling suggests impacts on prices appear after ~2.25 to 2.5 years and last several additional years. That sets current immigration’s effect appearing in late 2024 – mid 2025 and beyond.

Who's Saying What?

AMP Chief Economist Shane Oliver: Calls for reducing annual immigration intake from ~500,000 to ~200,000 to align demand with housing supply capacity, even suggesting current projections are underestimates.

NHSAC and other think‑tanks: Argue that high immigration has caused an estimated 79,000 home shortfall over five years; a modest 15% cut in population growth could reverse this.

Critics point out that current migrant concentration in cities exacerbates traffic, rent, and service strain, while minimal numbers are settling in regional areas where housing is more available.

Recent Market Trends Reflecting Impact

In June 2025, all eight Australian capitals saw rising prices simultaneously, driven by interest rate cuts and persistent demand amid tight supply. Rental prices surged over 40% since 2020, pushing more buyers toward units over houses.

Rental shortages and price spikes have forced many into “rent‑vesting” or moving far from urban centres, with younger and lower-income renters suffering the most.

Summary Table: Immigration Effects

Current Trend Housing Market Impact

Net Migration Rate ~446k–536k/year. Major driver of demand increases.

New Home Supply ~180k–190k built annually. Annual shortfall ~60k homes.

Vacancy Rate ~1.0–1.6% - Intensifies rental competition and price pressure.

Rental Price Growth 10–35% rising since 2020. Affordability crisis for tenants.

Home Price Dynamics Lagged impact (~2.5 years). Rising house prices nationally.

Looking Ahead: Balanced Approach Recommended

Experts highlight that current migration levels exceed the pace of housing construction and infrastructure expansion, creating structural imbalance.

To address affordability, combined strategies are needed: slow migration growth, dramatically expand housing supply, and disperse population growth to regional areas.

The government has introduced new housing targets, but meeting them remains a steep challenge without supply-side overhaul.

Current high immigration levels which are well above historical norms, have significantly intensified housing demand across Australia. With construction lagging, vacancy rates at record lows and rents sharply rising, both renters and aspiring homeowners face deep affordability pressures. Home prices continue climbing with a time-lag effect from past immigration surges. Without alignment between migration policy and housing supply policies, affordability will only worsen.

(References: Wikipedia, IFS Mentor, the conversation, forecast, The Guardian, Alor blog).

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Published by

Nick Karayanis B.Eng. UNSW (Civil)

Licensed Contractor NSW (Building)

Disclaimer:

The content of this blog is for informational and educational purposes only and should not be considered professional financial, legal, or real estate advice. Every real estate transaction and renovation project is unique, and you should consult with qualified professionals, such as real estate agents, contractors, and legal advisors, to address your specific needs and circumstances. The information provided here is based on personal experiences and research and may not reflect current market conditions or regulations in your area. Readers assume all responsibility for decisions made based on the content of this blog.