Australia’s housing crisis continues to deepen, but is migration really to blame for soaring prices and rents?
New data shows that over the past decade, Australia’s population has grown by 16 per cent, while the number of dwellings has grown by 19 per cent. Over a 20-year period, housing supply has also outpaced population growth.
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On Monday afternoon’s episode of The Briefing, we talked to Economist Matt Grudnoff, who explained that tax breaks with negative gearing and capital gains are the real issue.
Grudnoff said that Australia’s housing crisis was being fuelled by tax rules that favour investors, not by migration levels. He suggested that governments abolish these tax loopholes to make property more affordable.
“What it actually is, is on the demand side, and in particular, it’s investment demand for housing,” he said.
He highlighted the capital gains tax discount and negative gearing as key drivers that encourage investors to buy multiple properties, pushing up prices and locking many first-home buyers out of the market.
Grudnoff says removing these tax incentives could help cool demand while freeing up $14 billion a year in revenue, which could be directed to building more public housing.
While migration is often blamed for soaring prices, Grudnoff argued the recent increase is simply a “catch-up after pandemic border closures.”
“If you take the growth rate in the population before the pandemic and you project it forward as if the pandemic didn’t happen, the current population is ever so slightly below where it would be if the pandemic had not occurred.”
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