Australia's Housing Crisis: Could Cutting Immigration Be the Answer?
New research reveals a startling truth: immigration is significantly impacting Australian house prices, particularly in the rental market. Long queues at open houses have become the norm, leaving renters and first-home buyers struggling to keep up. But here's where it gets controversial: could reducing immigration levels be the key to easing this crisis?
A study by FoundIt, an independent property research group, suggests that dialing back migration to pre-pandemic levels could provide immediate relief. Their modeling indicates that this move would act as a brake on skyrocketing prices, particularly in the entry-level housing market, where the pressure is most acute.
Imagine this: by reducing the annual intake by roughly 100,000 people, we could see national home price growth slow by 2 to 3 percent annually. This wouldn’t trigger a catastrophic crash, but rather a much-needed correction. For instance, Sydney’s prices, projected to rise by 2 percent this year, could actually drop by about 1 percent. Melbourne, Canberra, and Hobart would also experience similar declines.
But this is the part most people miss: the impact wouldn’t be limited to major cities. Brisbane, Adelaide, and Perth, currently experiencing red-hot price growth, would cool to a more sustainable 3 to 4 percent annual increase.
The Institute of Public Affairs (IPA) analysis highlights a glaring issue: housing supply simply hasn’t kept pace with population growth. In 2025, net permanent and long-term arrivals hit a record-breaking 480,520, a 7 percent increase from 2023. Meanwhile, housing approvals plummeted by 15 percent in December 2025. This supply-demand imbalance fueled a 7 percent national dwelling price increase in 2025, adding nearly $80,000 to the average home price.
Kent Lardner, FoundIt’s head of research, points out a crucial oversight: “Since Covid, the focus has been solely on supply. But anyone who’s taken high school economics knows it’s about supply and demand. Migration is a demand-side factor we can actually control.”
The impact of high migration is felt most keenly in the sub-$750,000 market, where first-home buyers and investors fiercely compete. Rent increases, driven by migration, make these entry-level properties more attractive to investors, further squeezing out aspiring homeowners.
Angus Taylor, the new Liberal leader, has proposed migration cuts, hinting at a return to pre-Covid levels. SQM Research director Louis Christopher believes this could “work,” potentially delivering rental relief within six months, particularly in gateway cities like Sydney and Melbourne.
But is this a sustainable solution? Some argue that temporary migration cuts are a band-aid fix, addressing a symptom rather than the root cause. Dr. Kevin You, senior fellow at the IPA, calls the government’s National Housing Accord a “policy failure,” emphasizing the need for a comprehensive approach to housing supply.
The debate is heated. While some blame migration for the crisis, others point to political inaction and ineffective policies. Louis Christopher notes a “political reluctance” to address demand, arguing that cyclical migration adjustments shouldn’t be a partisan issue.
So, what do you think? Is cutting immigration the answer to Australia’s housing crisis, or do we need a more holistic approach? Let’s spark a conversation in the comments below!
