Migration plays a significant role in the ongoing housing debate in Australia. There is increasing bipartisan support for addressing housing affordability by boosting the supply of homes. However, opinions diverge on how to manage demand. Some progressives advocate for reducing demand by limiting property investors, while conservatives suggest that cutting migration is the solution. Peter Dutton, a prominent conservative figure, previously attributed housing pressures to a surge in temporary migration before the pandemic. This perspective resonates with some members of the Liberal Party and many voters.

Economists and housing experts acknowledge that migration levels impact the housing market, but they also caution about the potential costs of reducing migration. Recent discussions have focused on the record levels of net migration observed post-pandemic. In 2023, net migration exceeded half a million annually, driven by a high influx of temporary workers and international students, coupled with fewer departures due to extended stays granted during the pandemic. However, net migration has since declined sharply, with experts predicting this trend will continue.

Currently, nearly 2.5 million migrants reside in Australia, a record high. Despite this, the annual growth rate has returned to pre-pandemic levels. The recent growth rate of about 4 percent per year is significant compared to historical standards. In contrast, the growth rate of Australia’s housing stock has decreased. From 1947 to 2001, the number of homes grew faster than the population, but this trend reversed after 2001. Economists argue that supply shortages are the primary cause of declining housing affordability, as population growth has remained consistent while construction has lagged.

Most experts agree that population growth, particularly from migration, has contributed to rising housing costs. Research from Monash University and RMIT indicates that housing prices increased by 1.1 percent annually between 2006 and 2016 due to migration. However, this is a small fraction of the overall 5.95 percent annual growth in house prices during that period. Migration also brings economic benefits. Treasury data shows that permanent migrants typically contribute more in taxes over their lifetimes than they receive in government assistance, unlike the average Australian. Additionally, both permanent and temporary migrants stimulate economic activity through their work and spending.

Reserve Bank Governor Michele Bullock commented on the economic impact of migration, stating, "New migrants add to demand … they have certainly added to pressure on the housing market, we know that. But on the other hand, they have added to labor supply … I think it's been pretty much of a muchness." Temporary migrants have a minimal role in home purchases, accounting for only 1 percent of property transactions in the 2022-23 financial year. Nonetheless, both major political parties pledged to freeze foreign buyers during the last election.

In the rental market, temporary migrants have a more significant impact. Bullock noted that migration is exerting "big pressure" on rental prices. The Grattan Institute estimates that reducing permanent visas, as proposed by the Coalition, could lower rents by about 2.5 percent over a decade. Analysis from the Centre for Economic Development indicates that areas with high migration growth have experienced above-average rent increases.

While much of the housing and migration discussion centers on demand, migrants can also help increase housing supply by working in the construction sector. There are calls to prioritize construction workers in the migration program to address labor shortages in the industry. However, economists point out that Australia’s construction challenges stem not only from a lack of workers but also from inefficiencies within the sector. The Productivity Commission attributes these inefficiencies to complex regulations and outdated methods. Despite these challenges, Australia’s construction industry is relatively large, suggesting potential for increased output with existing resources.