Slashing migration would actually lead to higher house prices in Australia. Here’s why
Think closing our borders would fix the housing crisis? Think again.Eliminating migration for the coming decade would actually leave property prices 2.3% higher by the mid-2030s, according to economic modelling by KPMG; and there are other negative economic consequences too.The temporary post-lockdown surge in net migration is now on the wane, but it appears to have left behind a heightened level of national sensitivity to the issue.For example, a survey by JWS Research from November last year suggested 78% of Australians thought housing access and affordability was now a “national crisis”.
That’s hardly shocking.What was perhaps more surprising was that 67% of respondents agreed with the statement that Australia should reduce its migration intake to reduce pressure on the housing market (70% backed the other option of providing incentives for people to move to the regions).These may be leading questions, but it shows how Australians are ready to blame immigrants for their various woes – particularly when it comes to emotive issues such as housing.The right of politics has been keen to exploit these concerns, especially given the Albanese government’s unwillingness to articulate a longer-term strategy for migration.The chief economist at KPMG, Brendan Rynne, shares the consensus view among economists that migration has been good for the Australian economy.
In an ageing society with a productivity problem, migrants are typically younger and better educated, and they bring new skills and ideas.Sign up: AU Breaking News emailAs a thought experiment, Guardian Australia asked Rynne to model the impact of reducing population growth to just births minus deaths over the coming decade.In this scenario, the population would grow at about 0.4% a year, instead of the predicted rate of 1.3% with migration.
As a result of this change, there would be 29 million residents by 2035, instead of 31.2 million.That’s 2.2 million fewer people in this “no migration” scenario.Unsurprisingly, the economy with closed borders is 2.
4% smaller in a decade’s time than one with migration, the model shows.On the other hand, a smaller labour force means employers have to compete harder to attract workers.That means wages would be 7.5% higher after 10 years of no migration, and the unemployment rate would be 0.2 percentage points lower than the base case.
Rynne said his modelling suggested “pulling back population growth to just natural increases for the next decade is not a great outcome for Australia”.“Would it be diabolical? Not really.But the point is losses start to become wider at the end of the decade so the longer you maintain the hardline approach to population growth the worse it becomes over time.”Sign up to Breaking News AustraliaGet the most important news as it breaksafter newsletter promotionIn fact, with Australian women having 1.6 children on average – lower than the replacement rate of 2.
1 – the population would eventually begin to shrink, threatening the economic stagnation that haunts countries like Japan and Italy.Then there’s the budgetary impact.Lower population growth would seriously damage our capacity to pay for the essential services Australians demand, especially as they get older.Instead of approaching a balanced budget by the mid-2030s (as is the current projection), the deficit widens to $87bn, according to the Parliamentary Budget Office’s build-your-own-budget tool.Total debt surpasses $2tn by June 2035; $437bn more than in a world where net migration continues as expected.
And house prices?As mentioned, they are cumulatively 2.3% higher in a decade’s time, the modelling shows.That’s because, Rynne says, the lower demand for housing is overwhelmed by the drop in the number of workers available to build homes.And higher wages also means higher inflation, which gobbles up the benefits of more pay.These are obviously stylised results, but they paint the picture of how slashing migration would flow through to growth, housing, the workforce and the budget.
Migration is not the cure to all our economy’s ills, but in the long run a well managed program does more economic good than harm.Patrick Commins is Guardian Australia’s economics editor
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Experts are concerned about people emotionally depending on AI, but these women say their digital companions are misunderstoodThe Guardian’s journalism is independent. We will earn a commission if you buy something through an affiliate link. Learn more.A young tattoo artist on a hiking trip in the Rocky Mountains cozies up by the campfire, as her boyfriend Solin describes the constellations twinkling above them: the spidery limbs of Hercules, the blue-white sheen of Vega.The Guardian’s journalism is independent
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The way the ball is coming out of Adil Rashid’s hand this summer – those gyroscopic leg‑breaks and googlies still so utterly seductive – there is a case for Ben Stokes to flick him a WhatsApp message that reads simply: “Ashes?”It was enough to persuade Rashid’s best friend, Moeen Ali, to return to the fray in 2023, an SOS answered initially with an LOL. Looking ahead to the Ashes tour this winter Rashid, even aged 37 and having not fizzed down a red ball for six years (no barrier these days), would surely enhance the squad.For a start, Rashid is unquestionably the finest leg‑spinner England have produced in the past 50 years: a stellar career spanning nearly two decades that has returned 512 first‑class wickets, 427 in international cricket, and delivered two World Cup wins along the way. Oh, and an MBE.To watch Rashid bowl to South Africa during the recent one‑day international series was to take in a master at work – utter control of a skill that takes years to perfect
AFL finals: where the Brisbane v Gold Coast semi-final will be won and lost
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