I'm Shane Oliver, chief economist at AMP, says more migrants from overseas will push up demand for housing and keep runaway home prices out of reach for young Australians. Of course. So, Shane Oliver, I mean, it would be self-evident, would it not?
It's it certainly is self-evident that you have more people in Australia. It's going to mean more demand for houses. So I don't think there's any surprise in that. I guess the surprise is that the numbers still remain very high. We used to have, say, 230,000 immigrants each year in Australia, whereas that numbers are currently running around 300,000 or just
a bit above. And that obviously means strong ongoing demand for housing, particularly on the back of several years of immigration levels being much, much higher.
And and would it be fair to say that if the government won't address that issue, then they're not serious about making housing more affordable for young Australians?
Well, I can I think you'd debate whether they're serious or not. But the reality is that to seriously address housing affordability, you have to address the imbalance between the supply of housing on the one side and the demand for housing, which comes from high immigration levels. Uh, I think you have to do a mix of both. You have to get you have to get immigration levels back down to more sustainable levels, perhaps below the levels we had pre-COVID. And at the same time, you've got to
make it easier to supply more homes. So to be serious about it, you've got to do both. I think fiddling with capital gains tax and negative gearing, those sorts of things may be appealing, but they don't solve the underlying problem of a chronic undersupply of housing in Australia.
So Shane, what's your expectation with regard to so negative gearing is still allowed, but it's only allowed for new homes. So is your expectation that that will actually generate demand for the building of new homes.
Well, that's the theory. But in reality, most estimates are and most analysis suggest that won't be the case, because the reality is you're still discouraging a group of people, investors in this case, from investing in the property market. And they account for a big chunk of new home supply to the market. Even Treasury or the government in
the budget papers released Tuesday night. If you go to page 158, a budget paper, number one, they actually estimate that over the next ten years, that will be 35,000 less homes built in Australia as a result of the changes to the tax system. So in reality, it won't boost housing supply. It will actually reduce it. I think that's why they've had to announce that other policy to
to invest $2 billion in critical infrastructure for housing. But but the tax change itself is estimated to actually reduce the supply of housing, not increase it.
Shane, always lovely to speak with you. Shane Oliver, chief economist at the AMP.