Australia’s housing crisis is not just a political debate. While immigration is often blamed, based on assumptions that rapid population growth is outpacing housing supply and migrants are increasing rental demand, the reality is far more complex. The real drivers are decades of underbuilding, poor planning, and outdated policies. These long-standing issues are now impacting economic growth, workforce stability, social cohesion, and the ability of employers to attract and retain skilled workers from overseas.
At its core, the housing crisis is being fuelled by deep-rooted supply shortages, restrictive zoning, high land costs, and slow, inconsistent planning approvals. Outdated policy settings and limited infrastructure investment continue to constrain development in key urban areas, making it harder to meet current and future housing demand.
Meanwhile, employers across many sectors are struggling to fill workforce gaps, particularly in construction, where thousands of workers are needed. As demand for skilled workers increases, so does the responsibility to support their settlement. Relocation support is no longer a benefit but a necessity; it is a vital part of ensuring workforce continuity, employee wellbeing, and long-term business success.
Understanding the housing crisis: more than an immigration issue
In recent months, the idea that immigration is the primary cause of Australia’s housing crisis has gained popularity in political discussions. However, this view oversimplifies what is a complex, multi-layered issue. According to the National Housing Supply and Affordability Council, the real problem lies in the fact that the housing supply is failing to keep up with demand.
This supply shortage is now clearly reflected in recent construction data. Recent figures highlight just how far behind some states are falling. In Victoria, just over 60,000 homes were completed in 2024, falling 20,000 homes short of the state’s annual target. The December 2024 quarter saw only 13,955 new dwellings completed, representing an 8.8% drop from the previous quarter and marking the lowest quarterly result since early 2023.
This downward trend, shown by two consecutive quarters of decline, signals growing concern across the housing sector. To meet the Victorian Government’s Housing Statement targets, the state must average more than 80,000 home completions each year until 2034.
Zoning restrictions, high land costs, and prolonged approval timelines are major barriers to creating affordable housing in high-demand urban areas. These issues existed long before recent immigration increases and, as the Business Council of Australia notes, poor planning and regulatory systems, not immigration, are the root cause.
Interest rates, credit access, and tax policy play major roles
Falling interest rates from the mid-1990s to early 2000s increased borrowing power, allowing Australians to take out larger home loans. This boosted housing demand and led to rising property prices. Financial deregulation and increased competition among lenders made credit more accessible, further fuelling demand.
Tax policies also played a major role. Negative gearing allowed investors to deduct rental losses from taxable income, while capital gains tax discounts rewarded profits from selling property. These incentives encouraged speculative investment, where housing was treated as a financial asset rather than a place to live. Together, these economic factors significantly increased demand and contributed to long-term affordability.
Building on these national economic trends, Victoria faces additional challenges. Confidence in the state’s ability to manage growth has reached a historic low, with concerns mounting over the impact of cumulative taxes on development feasibility. Since 2015, Victoria is estimated to have lost 81,000 new homes and 90,000 jobs, as key investment has shifted interstate due to levies such as the Absentee Owner Surcharge and Foreign Purchaser Additional Duty. These tax settings have restricted access to critical development capital and added further pressure to already strained housing affordability.
The true impact of immigration on housing demand
Immigration does contribute to housing demand, particularly in metropolitan areas; but the scale of its impact is limited. A 2020 study by Moallemi and Melser indicates that a 1% rise in population due to immigration raises housing prices by only around 0.9% annually. Moreover, 60% of permanent migrants are already living in Australia and do not contribute to new housing demand.
Skilled migrants contribute significantly to Australia’s economy, with each migrant generating a lifetime net benefit of $249,000. Cutting skilled immigration would reduce government revenues. and increase the burden on local taxpayers
Employers’ challenges
Australia currently faces a shortage of 130,000 construction workers. While the government’s commitment to training apprentices is welcome, it remains a long-term strategy. In the short term, skilled immigration is essential to filling these workforce gaps. However, many employers are not adequately prepared to support international recruits during their transition.
With limited housing availability and rising rents near employment centres, employers have a critical role in helping workers and their families settle into Australian life. This responsibility extends beyond the workplace and includes meaningful support to ensure stability and retention.
The solution lies in planning, not cutting immigration
Reducing immigration will not resolve Australia’s housing crisis. The real challenges lie in limited land supply, restrictive zoning, and slow planning approvals across hundreds of local councils. These long-standing barriers have prevented timely development in areas where housing is needed most.
Blaming immigration diverts attention from necessary planning reform. As the Business Council of Australia highlights, governments must address structural issues rather than using immigration as a scapegoat. Skilled migrants are essential to filling workforce gaps, and reducing intake would risk economic growth and worsen labour shortages. A planning-first approach is key to long-term housing solutions.
Relocation support is a workforce necessity
In a tight labour market with rising housing pressure and a shortage of 130,000 construction workers, relocation support is no longer optional. Skilled migrants face growing challenges when settling near major employment hubs.
Employers who sponsor overseas talent must take an active role in easing this transition by offering:
- Short-term accommodation assistance
- Help securing long-term rental housing
- Guidance with school and childcare enrolments
- Flexible work arrangements to support broader housing searches
These are not simply employee benefits; they are essential parts of a successful workforce strategy.
Supporting the settlement process improves retention, boosts employee wellbeing, and accelerates workplace integration. In today’s competitive environment, businesses that provide comprehensive relocation assistance will be better positioned to attract and retain skilled global talent.
As immigration continues to play a key role in meeting workforce needs, employers that invest in long-term support will help secure a more resilient and productive team.
How Absolute Immigration can support your business
At Absolute Immigration, we partner with businesses to deliver strategic immigration solutions that support workforce growth and compliance. If you are hiring talent from overseas, our team can guide you through visa sponsorship, skilled migration pathways, and employer obligations.
Contact our team at aisupport@absoluteimmigration.com to explore tailored immigration strategies and workforce solutions for your business.
