Ciesielski says the measures could encourage foreign property owners to rent out empty homes but says the impact on house prices will be “minimal” as these types of sales have only made up 3pc of the market over the past five years.
Surya warns that there is likely to be a negative impact on the supply of housing.
“Most foreign investment in the housing sector goes towards new developments, which add to the stock of dwellings, rather than the purchase of existing properties,” he says.
A “chronically low pipeline of new homes” is expected to fuel a 5pc increase in house prices in 2024 and 6pc in 2025, according to Knight Frank. Oxford Economics forecasts a 4pc rise next year and 8pc in 2025.
“The Australian housing market has been undersupplied for the best part of the last decade,” Ciesielski says.
Only 173,000 new homes were delivered in Australia in 2022 – lower than the government’s 200,000 target.
This year the government is forecast to miss its target again, with just 172,000 homes built, according to Capital Economics, a research consultancy. Next year new supply is expected to drop to 152,000.
There was a shortage of 109,200 homes in June 2023 and it is expected to rise in the coming years, according to estimates from Oxford Economics.
The government increased its target to 1.2 million homes over the five years from July 1, 2024, which is around 240,000 per year.
‘It has never been as bad as this’
For those struggling to find housing in Australia, a boost to available homes can’t come soon enough.
Finding a home has become so difficult, even for working professionals, that people have started erecting “tent cities” in some places.
Jo Wallace, 40, is trapped in an apartment alongside cockroaches and toxic black mould because she has been unable to find another place to live.
“It’s dilapidated, damp, impossible to clean,” she says.
She has $10,000 in savings and a stable job as a paralegal, but it has not been enough to get accepted into a new rental close to her work in Melbourne.
“I’ve never been rejected so many times – even when I lived in Sydney at the height of the rental crisis there it has never been as bad as this,” says Wallace, who previously worked in financial services.
“That old thing of ‘just move further out’ or ‘go rural’ isn’t a thing anymore because the vacancy rates there are just as bad.”
Australian voters have little immediate recourse to punish politicians for a jump in migration and the impact on housing – they had an election in 2022. But in Britain it’s a different story.
With a general election less than a year away, Prime Minister Rishi Sunak has faced attacks from those on the Right of his party, who have urged him to honour the 2019 manifesto pledge to “control immigration”.
Sir Keir Starmer also recently accused him of betraying voters and sought to position Labour as the party to take control of the country’s borders.
With thousands of extra people expected to make Britain their home in the coming months, immigration could be the battleground issue that decides the fate of the Conservatives.
