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Birrell, Healey: Immigration and the Housing Affordability Crisis in Sydney and Melbourne, July 2018

House prices are higher in Sydney and Melbourne than in almost all other developed-nation cities with the result that most young households cannot afford to buy a detached house. Why? Part of the explanation is a combination of generous tax benefits to investors and upgrading home owners. This has prompted massive investment in dwellings, but mostly in established detached housing. This investment drives up prices without adding to supply. New research report, 3 July 2018Bob Birrell and Ernest Healy, Immigration and the Housing Affordability Crisis in Sydney and Melbourne

However these investors and upgrading home owners are competing for detached housing with large numbers of young resident and migrant households. Tax advantages together with high levels of immigration-fuelled population growth have meant that there has been only one way prices could go; that is up.

The Greater Sydney Commission along with the Grattan Institute and the Reserve Bank (as well as most planners and commentators) assert that the solution to the affordability crisis is to abolish zoning constraints on medium-density housing in existing suburban areas.

They all ignore the migration factor. Yet net overseas migration (NOM) is responsible for about 64 per cent of Sydney’s household growth, and thus 64 per cent of Sydney’s growth in demand for dwellings, and 54 per cent of Melbourne’s.

This study indicates that the abolition of zoning constraints will not solve the affordability problem. This is because the price escalation Allfor detached houses has simultaneously pushed up the site costs for potential new medium-density housing. The result is that developers cannot produce affordable family-friendly units or town houses on these sites.

In the recent past, in both Sydney and Melbourne, zoning constraints in established suburbia have been relaxed. However, the study shows that this has not led to significant increases in medium-density housing, for precisely this reason. We argue that a further relaxation of zoning rules will not work in the future.

The encouragement given by both the NSW and Victorian state governments to the construction of high-rise apartments has also not worked to solve the affordability crisis. This is despite the jump in the number of such apartments in both cities over the past few years. This supply has not solved the problem because apartments do not meet the needs of most new resident and migrant households, needs which are primarily for family friendly housing.

A cut back in migration has to be part of the solution to Sydney and Melbourne’s housing affordability crisis.

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This Sydney Morning Herald article by Aidan Anderson (5 July 2018) describes how Sydneysiders, like Melburnians, are joining Residents' Action groups because democracy doesn't seem to be working:

https://www.smh.com.au/politics/nsw/suffocating-sydneysiders-rise-up-against-overdevelopment-20180704-p4zphi.html

"Look around Sydney and you’ll see battles being waged in nearly every suburb between residents’ action groups and the state government. From Penrith to Bondi the warzones are green spaces, heritage buildings and community facilities. The terms of conflict are consistent: the government is attempting to override local opposition to overdevelopment in underserviced suburbs.

A conflux of changes has contributed to the explosion of residents’ action groups. The immediate factors are the back-to-back victories of a business first (people second) Baird/Berejiklian government, which decided in 2016 to forcibly merge councils and appoint administrators to oversee decision-making. Stripped of local representation, residents were forced to self-organise to oppose reckless developments."

Read more here ....

"I am horrified by what I have read regarding Australia's apparent readiness to sign the UN Compact for Migration. Australia already has disastrously high immigration from overseas and consequent pressures in large cities such as Melbourne and Sydney. The infrastructure costs are enormous, the cost to our environment is vast. There are so many arguments against Australia's current 3rd world rate of population growth and none which offer benefit to average Australians.

I strongly urge you to persuade your colleagues not to sign up to this agreement as it will spell disaster for our quality of life and our democracy. I can hardly believe that a government supposedly working for its constituency would even consider this step. Please tell me it is not happening!
Sincerely,
................."