#104 - Immigration & Housing: The Demand Shock

Australia’s housing crisis didn’t happen in a vacuum.

Since borders reopened after COVID, Australia has added nearly one million net migrants in just two years. At the same time, housing construction has failed to keep pace with demand.

In this episode, we break down the hard numbers:

• Post-COVID net overseas migration levels
• How many dwellings those arrivals actually require
• The National Housing Accord target vs current construction pace
• Rental vacancy rates and 20–30% rent increases
• The 25–35% home price surge across many markets in the past 36 months
• First home buyer grants and demand-side stimulus
• Investor lending rebound
• And how foreign investor purchases compare in scale

We examine whether immigration is the primary macro demand driver, or whether foreign buyers are playing a larger role than the data suggests.

This isn’t an emotional argument.
 It’s a supply-and-demand discussion.

When hundreds of thousands of people enter the country each year and we’re not building at the required pace, something has to give — and that “something” is affordability.

If you want to understand what’s really driving prices, rents, and generational divide in Australia, this episode lays out the maths.

Chapters

• 0:00 Setting The Housing Crisis Frame
• 1:20 Hosts Return And Disclaimer
• 2:00 Post‑COVID Immigration Surge By The Numbers
• 4:20 Foreign Buyers Versus Real Demand
• 6:10 The 36‑Month Price Boom
• 8:45 Rents, Vacancy, And Investor Tailwinds
• 10:40 Supply Gaps And Build Constraints
• 13:10 Grants, Demand Stimulus, And Unintended Effects
• 16:40 Affordability Math And Generational Divide
• 20:00 Inheritance, The “Bank Of Mum And Dad”
• 22:40 Takeaways And Closing CTA

Transcript

Setting The Housing Crisis Frame

SPEAKER_00 0:00

Australia didn't accidentally walk into a housing crisis. In the last two years alone, we've added nearly a million net migrants to the country. At the same time, we're building nowhere near enough homes to house them. Vacancy rates are under 1%. Rents are up 20 to 30%.

SPEAKER_01 0:16

Prices have surged again and again, even during rate hikes. Meanwhile, the public debate keeps pointing fingers at foreign buyers as opposed to immigrants, as opposed to government incentives. But when you compare thousands of foreign purchases to hundreds of thousands or millions of new residents, the math tells a very different story.

SPEAKER_00 0:37

Today we break down the numbers immigration, housing supply, investor demand, first home buyer grants, and why the system is structurally out of balance. This isn't anti-immigration, it's pro-reality. Zeke here and your co-host Oscar. But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice.

SPEAKER_01 1:08

Although, if financial advice is what you are seeking, let us know. We can get you in touch with the correct team.

SPEAKER_00 1:13

But for now, sit back, relax, and enjoy the show. Let's get into it.

SPEAKER_01 1:21

And here we are, the boys are back together. Once again, the boys are back.

SPEAKER_00 1:25

Welcome. Yeah, thank you. And it's welcome to everyone listening who has been waiting for a while since we've been back together. We've been doing the solo episodes for quite a while now, but when we're together on a work trip, we always try and find a time to record one, two, or three potties.

Post‑COVID Immigration Surge By The Numbers

SPEAKER_01 1:42

And as everyone knows, it's been a bit difficult in the last couple of months uh due to my injuries. We had the rib recovery, the collarbone recovery, a couple broken bones, but we're here, the voice is working. I'm going to do it. Had to do a health retreat and get the body up and moving, a little bit of a rehab, we call it. But let's jump straight in. So I guess first of all, immigration, like post-COVID, there's been a huge surge of immigration.

SPEAKER_00 2:06

Especially just with if you're in Australia, well, all over the world, but let's just talk purely about Australia right now. The news, probably the last six months, has been very immigration heavy. You've got all these political, you know, individuals running for seats and and power, and one of their main points is always about the immigration. So if you haven't heard about immigration, you've been living under an absolute rock. So it's one of the most popular topics at the moment. And as Zeke said, post-COVID, it has gone absolutely ballistic.

SPEAKER_01 2:37

Yeah, it's gone up an excessive amount. Like when you're talking a country with a population of what, like 27, 28 million now, and you've got coming in like post-COVID 21 to 22, 170,000. Not too huge of a number, but a pretty high number nonetheless. 22 to 23, half a million, which is a record high. 23, 24, just shy of half a million, twenty-four, twenty-five, three hundredk plus. So we're talking like grand scheme, about 1.2, 1.3 million people there that have been added into our economy in the last four years. Now, how does that work? How many houses do we need to build for that? What actual impact does that have? And if you're talking our average household size in Australia, right, like 2.5 people, that's about half a million houses that needed to be built. Plus what we already have going on in the country. We already have a housing shortage, we already have prices going through the roof, which we'll touch on the pricing boom.

SPEAKER_00 3:37

But that's just crazy. That's why the young individuals in Australia can't get into the housing market or buy the houses they want. And that's just for migrants. That's not even including your natural population growth or your household splits, etc. Like that's purely those numbers are just from the immigration alone.

Foreign Buyers Versus Real Demand

SPEAKER_01 3:56

Yeah, so when you've got a an undersupply of housing, you've got children moving out, divorce happening, splits happening, just natural growth of the population, when all of that's going on, and then you just insert another 1.5 million people in four years, guess what? Prices are going to go up and people are going to struggle. So moving on to the housing boom, I guess. Well, actually, before we move on to the housing boom, let's actually have a think about this from another perspective. Oh, tell me, what perspective are you looking at? Well, we see a lot of fun in the news and a lot of um people posting things on socials, right?

SPEAKER_00 4:34

Yes.

SPEAKER_01 4:34

And we see all, you know, the house prices, it's not due to immigration, it's not due to undersupply, it's not due to this and that. But what it's really due to is foreign buyers. So let's have a reality check on that. Typically, foreign buyers are measured in the thousands per year, like actual thousands, not hundreds of thousands, not millions. Over the last four years, we are still talking thousands, not even hundreds and hundreds of thousands. And they're often from memory restricted just to new builds. They are, they're always new builds, and generally speaking, they will get rented out. Some states don't even allow it anymore. But overall, it's less than five percent of total property transactions each year.

SPEAKER_00 5:15

Yeah, which when you compare that to the you know three to five hundred thousand net migrants per year. Exactly. Very, very different.

The 36‑Month Price Boom

SPEAKER_01 5:22

So realistically, the foreign buyers aren't impacting the pricing that much. It is more of an immigration problem. And ultimately, when you've got foreign buyers or foreign investors purchasing property, like the we're actually just talking foreign buyers in general here. So they might buy and move here, but the ones that are investing that then rent them out, guess what? When you've got immigration of 1.5 million in four years, then they've got to go somewhere, right? Without people having properties to tenant, where are they going? They're not coming and buying a house straight away most of the time. So the that argument is just absolutely ludicrous. That's the only way to put it. You're comparing literally thousands to millions, and it's common sense, but we'll move on from that. I just wanted to address that topic really quick because there's been a bit of uh bit of conversation around it lately.

SPEAKER_00 6:16

There has been, and that kind of that goes perfectly for the next home price boom that we're going to talk about, especially the last 36 months. So you've got all the immigration and those record numbers there in 22-23 of 518,000 people coming in. So since early 2022, in terms of house prices, the national dwelling values have increased by 25 to 35 percent. And you've got you know, you're the big players, is as in the States, you've got the Perth, you've got Brisbane, Adelaide, which have all done very well in the last 36 months, they in some periods have risen to for up to 45%.

SPEAKER_01 6:58

And even with 45% in some of that, that's as a whole, if we're talking specific properties, I've seen and you've seen clients like clients of ours, for example, literally making 80% in a three-year period, or jumping into a market, and even though the national dwelling value might be up 35% in some cases, or on average 25-35%, which just quickly is more than 8% per year, which is more than the SP 500 per year. So Australian property again, outperforming share markets. We've talked about this. But we've seen clients make upwards of 50% in three years, 60%, 70%.

SPEAKER_00 7:35

Oh, clients have made 200 grand.

SPEAKER_01 7:37

Yeah, it's in two years. It's been outrageous to watch. We've had clients make over 150 grand in one year.

SPEAKER_00 7:43

Yes, that was and if you haven't seen it, that's how Spotify racked for 2025. Go on to Instagram to have a look at all those numbers.

SPEAKER_01 7:49

Absolutely, and that's sub-1 million dollar purchasing, too. So percentage-wise, it's outrageous.

SPEAKER_00 7:54

And also it just shows you though, it's it's achievable. Also, all the news headlines, housing's unaffordable, you can't get into the market, there's a the home crisis, everyone's screwed. Well, look, if you're trying to buy an owner-occupy for yourself and you're talking probably 1.5 to 2.5 minimum for a place, let's just say Melbourne or Sydney, if you look at rent vesting, get something for six, seven hundred K in a high growth area, you could get results like Zeke's just talking about now. It's simple, you just got to kind of shift the perspective.

Rents, Vacancy, And Investor Tailwinds

SPEAKER_01 8:27

Yeah, and then as well as like we've had right rate hikes happen and the prices are still going up. Um, immigration is one of the main factors. In fact, I'd probably say the number one factor personally. But then if we throw in things like the foreign buys, yeah, they contribute a little bit less than 5%, as we just said. But you can move on to things like the housing supply reality. We can move on to things like the first home buy grants and demand stimulus. Um, we can move on to investor lending having a rebound. There's so many different little aspects to touch on, and let's just do it.

SPEAKER_00 8:57

So Yeah, well, the vacancy rates is a big one. So that's in many capitals, that's less than 1% now.

SPEAKER_01 9:03

Absolutely.

SPEAKER_00 9:04

Which is massive. For anyone who doesn't know what vacancy rates means, it's basically how long the property is vacant or free for. The lower the number, the better. Ideally, you want to get under 1%, ideally, if it's in a good growth area.

SPEAKER_01 9:18

That's from an investment point of view. From an economy point of view, we'd want roughly around 2%, 3%, same as inflation, because then it's more of a balanced market. When it's at the the sub 1%, the sub 2%, then people like us are laughing, like investors are winning drastically, and we can create like a good rental market in an area where we can drive demand and really take advantage of it to make the most money possible from a rental capacity. So then your property's tenanted quicker, you're getting higher rent than you could, and also then your servicing increases for more lending down the track.

SPEAKER_00 9:53

And speaking about rent, that's gone up 20 to 30% in many capitals. And the funny thing is, you've got you know houses, apartments, townhouses, units. So everyone generally in the past is a bit skeptical about buying a unit as an investment property, but some unit markets, in terms of rent, have gone up to 40% at their peak. So that's outperforming houses. So there are pros and cons for everything, but it just shows you that if you're in the right unit, you can still make money and your rent can go up drastically.

Supply Gaps And Build Constraints

SPEAKER_01 10:26

And it's so easy. And while people are thinking about that as well, just from an investor point of view, quickly, even though we're talking about many, many things in this podcast, is units obviously come with strata, but when you do the math on it, strata, if it's like what, 40 bucks a week, adds up to be roughly what an insurance policy costs anyway. So when you get an insurance policy for your home, for your investment property, versus paying strata, do the numbers, it's not actually that bad. But the thing is with rentals, immigration hits that first, right? Because they come here, they get somewhere to rent, rent spike, vacancy crashes, the investors then have the capacity to increase their lending so they re-enter the market again, and then price pressure follows. It just goes again and again and again and again. But then you've got the housing supply, which we know is not very good to put lightly. Like, we needed 1.2 million homes built between 24 and 29, which is like 240 a year. Yeah, 240,000 per year. I know for a fact that we're not building that. Like last year we built 180,000 in the year, so we're 60k short. There's build delays everywhere, there's land delays everywhere, land release delays, trade shortages, insured events happening where we need to pull trades out and go and rebuild things like the floods, the cyclones. And then you've got an actual trade shortage as well. You've got supply shortage, you know, brickies and WA are under the pump, landscaping's not really moving over there.

SPEAKER_00 11:55

But that just basically just confirms that prices are going to continue to rise until at least 2029.

SPEAKER_01 12:00

Absolutely.

SPEAKER_00 12:01

Based on those numbers there from 24 to 29. So if you're umming and Ring and sitting on the fence waiting for you know prices to drop or to absolutely have the big explosion and everything just free fall, well, looking at these numbers and a market which is undersupplied, which is the housing market in Australia right now, you know what happens? Prices continue to go.

Grants, Demand Stimulus, And Unintended Effects

SPEAKER_01 12:23

Yeah, and if if we're only building 180,000 per year and we're letting in half a million immigrants per year or 400,000 immigrants per year. Yeah, do the math. But 180,000 doesn't even house them, let alone the natural production, like alone people moving out, let alone divorces and so on. So it's going to end up much shorter than what we're actually anticipating, I believe. And if we're even if we continue at that trend, we just go 180,000 per year, 60,000 short per year, based on the forecast done back in 2024, then we end up in a position where we're short nearly 300,000 houses. And if if immigration keeps increasing or coming in at the rate as up, it's going to be more. So housing is not going to get any cheaper. It would take anything. Or Goldilocks, a little bit of both, would be the smart solution. I'm not a politician, I wouldn't know. But in terms of other things impacting it, we've got the first home buy grants and demand stimulus and stuff.

SPEAKER_00 13:32

Yes, that 5% deposit scale. It looks good on the outside, but if you jump on in jump on in and you're a student or a young individual, young adult, that's going to really screw you over over time. You've got a 95% loan that you're going to be paying off for the rest of your life. Some people are getting these properties, their first home, and yes, you've got the deposit for the 5%, but as soon as you start paying that off, you are digging into your lifestyle, and everything that you've wanted is going to be hard to get now because all your money is going to your mortgage.

SPEAKER_01 14:06

A 95% loan is a heck of a service ability that you've got to repay.

SPEAKER_00 14:12

And then if you're wanting to buy an investment down the track, you're going to be waiting quite a while until you can actually service another property. Unless your income is ridiculous.

SPEAKER_01 14:22

But another perspective as well is when you from if you take a zoomed out approach and you actually understand what's happening here and you you know economics, you know how markets react, if you've got a portion of people that are all stuck at the same level, and then you go, okay, that portion of people let's increase the level they can get to. For example, the deposit scheme, 5%, first home guarantee, or you know, the stamp duty reductions and so on, then all you do is you take that whole cohort of people and you increase what they can afford. Now, if you increase what they can afford, guess what? They can all afford that increase. So you automatically create a mechanical growth of house prices. For example, if I say I want to buy this house, I've only got 50k that I can use, I am capped out. All right. If I then magically get a grant from the government and I can now afford 700k, but the rest of my population can do the same, then guess what? The new price is 700k. So it doesn't actually help people enter the market.

SPEAKER_00 15:23

It's just pure purely inflation.

SPEAKER_01 15:24

Yeah, it just mechanically inflates everything artificially, and then prices go up because everyone's in the same boat. Realistically, the winners are the other people that already have property again, or the investors. The poor RBA is sitting there going, uh oh, house prices are out of out of order, they're going up. Well, we're gonna have to make another rate cut. Yeah, cool. Let's make a rate, sorry, a rate hike, let's increase rates to try to limit house prices. Demand isn't changing, and then the government and the RBA are just doing this back and forth, going, okay, well, you've increased what can what people can basically afford to buy by giving all these grants out. And then the RBA is sitting there going, well, we're gonna have to do a rate hike so that we we can limit house prices. But guess what? It's not gonna change. The only way to make an actual change is to either a increase supply or decrease demand, both of which they're not doing. Increasing supply, you've got to either remove red tape and make developers be able to get approvals quicker and hump through building, or to ultimately reduce demand, we need to decrease the amount of immigrants that we're letting in, but we're letting in heaps because we need it for GDP, and because it's seen as racist to not let them in. So there's no trigger.

Affordability Math And Generational Divide

SPEAKER_00 16:35

And look, now in terms of housing affordability, there's a bit of a generational divide going on. So our parents, our grandparents always were talking about how they got a property for you know 50 grand back in the day, which to us now is ludicrous, it's crazy. And they generally got their first house 18, 19, got married at the same time. But now when you look at the actual multiplication of how much income you need to buy a home, in 1980 it was 3.3 times your income. 2000, five times, 2010, 7 times, 2025, it's gone up to 11 times nationally, which means if you're wanting to buy a million dollar house, you need a 200k for a 20% deposit. In Sydney alone, it's 13 to 14 times, which is absolutely ridiculous. You compare 1980 to now, 3.3 to 13 to 14 times. So if you're wanting to buy a house in Sydney, for example, good luck if you're a single income earner because you will not be able to get far. Like you can't even really get a small one-bedroom apartment these days for anything less than a million dollars, which is absolutely ridiculous. So you definitely need dual income, it has to be required. And the barrier for entry with deposit levels, the gap is widening every single month because what you were talking about before, with the whole property market, the undersupply, the price is going up with immigration. These people who are in their 20s and even 30-year-olds who haven't got into the property market yet, their deposit is going to need to increase every single month because they're just getting priced out. It's ridiculous.

SPEAKER_01 18:19

When you've got in 1980 a 3.3 multiplier, so for 60k income, the house is like 200k. Now, if you're on 100k income, it's like 1.3, 1.4 million. So it's just not feasible. And then when you start getting these people together who need to be able to afford these homes and stuff, the lending capacity is just so limited that it doesn't even work. Like if your borrowing power is so low, generally a six to seven times multiplier, give or take, how the heck are you going to afford to buy property at 13 or 14 times the price of your income? It doesn't work. And then you need bigger deposits. You can't save a bigger deposit because if properties are going up quicker than you're able to keep up. It's just a terrible cycle. The quicker you're in the market, the better, because you can take advantage of the property prices increasing to then help you get another one.

SPEAKER_00 19:07

But if you're not in the market, you're screwed. And with you talking about the savings rate, so since 2000, wages have grown 2 to 3% per year. Property, on the other hand, averaged 6% to 7%. So it is the gap is enormous, and that's going to continue to actually widen, as you just mentioned.

Inheritance, The “Bank Of Mum And Dad”

SPEAKER_01 19:22

And it's not only just that that is occurring, like property is growing between 6 and 10% per year, and wages are growing 2 to 3%. When you strip inflation out, realistically, wages aren't growing and property is growing between like 3% and 6%, but it compounds as well. Like the gap is compounding because you've got the borrowed money, you've got the bigger actual price. Like$100,000, like a wage going up 3% is now 103,000. But a million dollar property going up 6 to 7% is going up like 60,000. So that's a huge difference that's occurring. And realistically, real wages are actually down since 2020. Inflation like adjusted. Real wages have shrunk about 7%. Property, on the other hand, is up between 30 and 40%. So it's an absolute structural decoupling. It's terrible. You throw in other things like you know, back in the day, under 35 is home ownership. Super high, as you said before, in the 80s. Super high. You know, 60, 70% in between there. Had a home. If you move forward to 2021, it's about 45%. If you move forward to now, it's probably about 40%.

SPEAKER_00 20:27

I was going to say, yeah, four years later, five years later. Yeah. And look, the the key thing is these days as well, most people in that 30 under 35 home ownership who are getting into the market, there's a high percentage who actually receive parent assistance. Like inheritance, a bit of a handout, just helping your parents, even getting guarantor by your parents. And it's one of now one of the largest lenders in Australia, the bank of mum and dad, because people themselves can't actually save enough for a deposit with just the work alone.

SPEAKER_01 21:00

How good is the bank of mum and dad? God, I wish I had the bank of mum and dad. It's a great bank. There's a couple of banks I'd love to be a part of, actually. There's a certain bank out there, 2% interest rates. How good? Yes, they are great banks. I'd love to be part of that. But unfortunately, we're not in a position where that's happening, and a lot of people aren't. A lot of people aren't in a position where they can get those interest rates. A lot of people aren't in a position where mum and dad can just bail them out. Yeah. And unfortunately, they rely on the government to bail them out. And when the government bails them out, they bail everyone out, and then prices just keep going up.

SPEAKER_00 21:28

And then if you're on rely on the government at the other end when you're trying to retire, good luck to you. You're not going to be making that much money for the rest of your life. Yes. 30 35k give or take between a couple is not really feasible. So yeah, moral of the story, do not rely on the government.

SPEAKER_01 21:44

And then we need to take into account as well that we've got the inheritance effect. So wealth is increasingly tied to property ownership. Like the more that we go on, the more that people can help other people in the properties, the more you inherit property is just going to go up and up and up, and people Are going to not be able to afford them. But if your parents had property and then their parents before them had property and so on, then it's going to make it a lot easier. Like we have clients now who have say three, four, five properties and two children. So when they get to a point where it's passing time, then the children are going to be happy. Whereas if you don't have that, it's a failure.

Takeaways And Closing CTA

SPEAKER_00 22:21

Yeah, exactly right. Like it's it's we've now shifted from a merit-based entry system to the property market to an inheritance-based entry system. So if you're serious about, you know, if you have young kids and you're wanting to help them in their future, well, you've got to help yourself first. Because if you're not going to help yourself now, what are you going to leave them when you eventually pass away in 80 years or so? Yeah. If you're lucky, 80 years.

SPEAKER_01 22:46

I think we're finally at a point, like if you've read The Millionaire Next Door or The Next Millionaire Next Door, what we took from that is that immigrants and first generation people were actually the ones who were having most of the money at that point in time. Like they were the ones who were becoming the millionaires, as opposed to people inheriting it. I do think that we're finally going to be at a point in time where that will change because it's getting so difficult to enter the property market. And as time goes on, that should change. I mean, whether that produces more bums, I don't know, because they're like, I don't need to do anything, I get inheritance, probably. Which is what currently happens, but I think that should shift.

SPEAKER_00 23:23

You gotta set yourself up early on for your future self. What's the quote Warren Buffett says? Plant the seed so you can sit under the shade or something. Don't actually know.

SPEAKER_01 23:34

Well, there you go. That's a great little uh way to finish it off. We'll catch you all next time. Ciao. Well, that is the end of the episode. We hope you enjoyed it, and if you did, you know exactly what to do.

SPEAKER_00 23:48

Hit that follow button, like button, subscribe, share it to your friends, families, or even a co worker.

SPEAKER_01 23:54

If you're really feeling generous, you could send it off to an ex. But catch you next time. Hope you enjoyed it. Dale.

SPEAKER_00 24:00

Ciao.