The corporation, which provides advice to the government on housing demand, said the sharp fall in net overseas migration will see fewer dwellings being built and will also hit rental markets, particularly those dependent on international students.
“If this decline is sustained, it could cause a contraction in construction activity that will add to the recessionary forces impacting on the economy,” the corporation found.
“Australia’s second wave of infections is likely to further slow population growth, adding to the depth of the downturn and hindering the pace of recovery in underlying housing demand.”
The article quickly stirred up a debate about the sustainability of Australia’s population and the country’s levels of immigration.
Many readers queried the pessimistic tone they detected in the article, saying the forecasts were a potential silver lining to the pandemic. This group was hopeful that under the scenarios outlined Australians would see more affordable housing, and a rethink on how to drive the economy beyond what they saw as an over-reliance on the property industry and immigration.
Jay Chan: “The one good thing about coronavirus is that finally our overburdened, overpopulated, polluted, gridlocked capital cities can get a breather from unsustainably being force-fed hundreds of thousands of migrants in the name of ‘economic growth’ with no change to infrastructure like roads, hospitals and schools. Young Aussies may have a better hope now of owning their own home.”
Carmine: “So, the Ponzi of bringing in more migrants is finally collapsing. About time.”
MelbourneGuy: “While some may see this as bad news, many of us, including home owners, see the madness of population growth led housing bubbles as our primary industry stalling as a complete blessing. Hopefully we now learn as a society that there are other ways to run an economy other than the aforementioned… And a stable population spells great news for the environment. An opportunity awaits us to best utilise this new, albeit temporary, reality.”
XXI: “Madness to take the lazy path to growing your economy by putting all your eggs in the one basket and relying on high immigration and international students and tourists – it’s not like we didn’t know we were overdue for a pandemic. Time to start a long term massive program of building social housing, schools and hospitals and aged/disability care providing ample and secure work opportunities for the Coalitions beloved tradies.”
Reflecting on the reader debate, Wright says population growth and housing are contentious areas at the best of times, so it was little surprise there were more than 400 comments.
“Overcrowding, congestion and the ‘Ponzi scheme’ refrain all came through loud and clear from many readers who face the consequences of Australia’s growing population on a daily basis…,” he says.
“Those priced out of major population centres also see a chance to own their own home thanks to a reduction in demand for housing.”
While he wasn’t surprised these views dominated the debate, he had expected several other issues to rate a mention.
“Surprisingly, government failure to provide adequate services or infrastructure to deal with the congestion issues around a growing population did not get much of a look in,” he says.
“Few mentioned the benefits of immigration or even a rising fertility rate.
“And barely any saw the link between the demand for goods and services that a growing population needs and what that might mean for the jobs and incomes of those already in the country.”
While some readers sought to inject what they viewed as a dose of realism to the debate they were outnumbered.
sunny: “oh lord the anti immigration crowd are being encouraged again. They don’t get that immigration is growth for the nation and economy, without it we stagnate and become a banana republic. We have a very small population, we need more people… simple.”
Mike54: “Back to last century, it is. When I first arrived here Australia was a sleepy village, boring to death. Four decades later, it has become a vibrant society driven by intelligent people from all over the world, slowly but surely replacing the local ‘laid-back’ larrikins with goal-oriented, hard working migrants. And instead of being grateful to the migrants you spill your vitriol over them? Just proves how desperately we need qualified migrants!”
Shirl: “It seems the Property/Population Ponzi Scheme Club is out in force today. Me thinks they’re about to find out how challenging it is to maintain their desired standard of living when the economy starts growing below trend and the population starts ageing faster. Be careful what you wish for.”
DooneyBoy: “With the obscene amount of debt the government is about to rack up, combined with a fertility rate that is well below ‘replacement’ levels (<2), we are going to be in a world of hurt without meaningful immigration intake (as a bare minimum at pre-COVID levels). Once the vaccine is here, those immigration ‘welcome mats’ are coming out in force, whether we like it or not. Someone has to pay off a trillion dollar debt.”
Speaking ahead of next month’s federal budget, Treasurer Josh Frydenberg on Thursday warned that by the end of the current financial year, the economy would be about 6 per cent smaller than had been forecast in the 2019-2020 mid-year budget update.
“The recession places pressure on all three elements of potential growth in the economy – population, participation and productivity,” he said.
“Australia’s future population will be smaller, and older, than we previously assumed because of the sharp drop we are seeing in net overseas migration.
“This economic scarring, together with lower levels of business investment, is likely to dampen participation and productivity – the other two key elements of potential growth.”
For some readers, the predictions of a property downturn were met with scepticism or a ‘she’ll be right’ attitude.
Mike: “A contrarian argument to this is we will see demand level out as thousands of Australians overseas repatriate themselves and their families to Australia in the wake of the pandemic. Suddenly, being safe is a lot more attractive than living overseas in the UK or US, or dealing with a lockdown in a small apartment in Hong Kong or Singapore.”
andi: “I have learned to believe nothing about the experts’ predictions about housing prices. One week up , one week down.”
tonykite: “Prices are holding up in suburbs close to the Sydney CBD and many houses were recently sold well above the asking price… Prospective buyers and sellers are constantly on the look-out waiting for the right moments. The drop in migration and number of overseas students means nothing for locals with money.”
orrtron: “One comment Australia is not just Sydney and Melbourne…where I live in SA on the Fleurieu peninsula housing is booming (both construction and sales) and rental vacancies are basically zero… at affordable levels. Your own paper has written of the sea change charge to coastal communities to the detriment of locals.”
Wright says while he understands the scepticism “when you’ve got far fewer people coming into the country, it only follows that demand for new dwellings has to follow”.
Online readers of The Sydney Morning Herald and The Age made 54,150 comments on 714 stories in the past week.
Most-read articles by subscribers in the past week
Sydney Morning Herald
Orietta Guerrera is the Reader Editor for the Sydney Morning Herald, The Age, Brisbane Times and WAToday. She was previously Federal Political Editor for the mastheads.