A new report from the National Housing Finance and Investment Corporation has emphasised how the dramatic drop in new immigrants to Australia will put more pressure on the residential construction sector and compound the already calamitous economic downturn in the country.
Demand for new dwellings could drop by between 129,000 and 232,000 dwellings over the next three years, the agency estimated. This would be a near-unprecedented decline.
Immigration accounts for 59% of population growth
The pandemic has effectively shut down immigration, which has accounted for 59% of Australia’s population growth since 2007.
Currently around half of all migrants are students, but this source has largely ground to a halt – particularly from nations such as India, China and Brazil.
“This research highlights the strong relationship between population growth, increasingly through net overseas migration, and underlying dwelling demand, with the outlook for population growth due to Covid-19 highly uncertain,” the corporation’s chief executive Nathan Dal Bon said.
Foreign student numbers will take years to recover
According to the corporation’s report, when student numbers dipped during the global financial crisis, it took around four years to recover. This, therefore, does not bode well for a quick recovery in immigration numbers once the pandemic has passed.
There is another factor that concerns the corporation’s researchers: “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,” it says.
Property Council wants more HomeBuilder stimulus
Meanwhile the Property Council of Australia – a national lobby group representing property developers and property owners – has noted the corporation’s report and has also called on the Federal government to extend its successful HomeBuilder stimulus program for new housing construction for a further six months to July 2021.
The Property Council has also recommended a ‘Welcome to Australia’ migration plan to provide the skills, people and growth the economy needs.
Its Chief Executive, Ken Morrison, said: “The NHFIC report paints the scenario we can’t allow to happen, because if we do it will mean many tens of thousands more Australians losing their jobs.
Restarting migration program should be a priority
“A roadmap for restarting our migration program should be a top priority for National Cabinet.
“It will need to be done safely, sensibly and in stages with public health always at the forefront – but we cannot avoid the inescapable and profound economic impact of keeping our international borders closed to migration,” he added.
“Migration always has and, will continue to be, one of the big drivers of our economic growth and prosperity, and needs to be front and centre in our economic recovery plans.”