Housing crisis? What housing crisis? A look into the political paralysis behind the housing shortage
Heidi Cuthbert’s article, “Why no one really wants to fix the housing crisis,” (21 March 2025), offers a sobering look at Australia’s escalating housing affordability crisis. Cuthbert highlights the rather staggering statistic that median mortgage repayments now consume just over 50 per cent of household income, and in doing so, underscores the severity of the issue.
For the one-third of Australians, who have taken out a mortgage (likely to be an exceptionally expensive property when compared to other countries), the cost-of-living crisis is largely dominated by their mortgage repayments. For another third of Australians who don’t own a property, the cost-of-living crisis is represented by an inability to afford property. So, for two-thirds of Australians, the cost of living crisis is the property crisis. And the property crisis is, in fact, a migration crisis.
Cuthbert points to a web of vested interests – banks profiting from high property prices (I would add our entire financial system is dependent on high and rising property prices thanks to the majority of bank assets being residential mortgages), government policies that inflate demand (think first home buyers grants etc.), and an “insanely high migration rate” exacerbating supply shortages – as key contributors to the problem.
While Cuthbert’s analysis identifies critical supply-side solutions, one glaring omission stands out, and it’s the same omission in hundreds of articles and reports seeking to propose solutions to the housing crisis: the demand side. Halting or significantly reducing migration, a primary driver of housing demand, is not explicitly proposed as a solution by Cuthbert.
Here at the blog, migration’s role in the crisis has been a recurring theme.
Cuthbert acknowledges migration’s impact, noting that “the influx of new residents increases demand not just in urban centres but also in surrounding regions.” But for reasons only known to the author, Cuthbert cautions against scapegoating migrants, framing the issue as systemic rather than solely migration-driven.
Generally – and you might have a different view – it is still the case that discussing migration’s role in the housing crisis risks being labelled something other than tolerant.
Cuthbert’s suggested remedies include boosting supply via modular construction, streamlining approvals, reforming investor-friendly tax policies, and encouraging banks to fund affordable housing. These are pragmatic longer-term options but stop short of providing immediate pressure releases by addressing migration head-on.
Mentioning “lowering migration levels to align with housing availability” fails to acknowledge the massive supply shortage means the only migration level that aligns with availability is zero. This frequent and all-too-common reluctance to prioritise migration control perpetuates the housing and cost-of-living crises for all Australians.
Almost two years ago, in my blog post “Big Australia policy fuelling inflation and a housing crisis” (27 October, 2023), I asserted, “Post-pandemic Australia is experiencing a remarkable surge in its population. Predominantly driven by a sharp incline in net migration after border restrictions were lifted, this boom… puts pressure on prices, entrenches inflation when supply is unable to keep up and poses essential questions for the country’s housing sector.”
Back then I quantified this pressure, citing Australian Bureau of Statistics data showing a population increase of 454,400 by March 2023, largely due to migration, translating to demand for roughly 182,000 new households amid a clear shortage.
My solution then was unambiguous: slow migration to allow infrastructure and housing supply to catch up.
Last year I revisited this in “Is Big Australia a big mistake or a big lie?” (19 December, 2024), stating, “The answer is not to knock down more houses and knock up more apartments. The answer is to slow or even stop migration …long enough to allow infrastructure to catch up and to fix the fundamental deficiencies the last thirty or forty years of government policies and ineptitude have created.”
This directness does contrast with the more diffuse approach adopted by so many other commentators, which spreads accountability across multiple actors without targeting migration as an actionable lever.
Cuthbert’s hesitation to emphasise migration reduction may reflect a broader reluctance to challenge Australia’s economic reliance on population growth or to navigate the politically charged nature of immigration debates.
She correctly identifies banks’ profit motives (60 per cent of their lending is tied to residential property), and government complicity (through policies like superannuation access), which I also critique as a demand-side distortion. Yet, by not elevating migration control to the forefront, I believe many writers sidestep a root cause that I have consistently flagged as addressable.
In “What does fewer migrants mean for property?” (27 July, 2020) I noted, “One of the major drivers of Australia’s boom in property markets has been the strong population growth… running at around 1.6 per cent per year since 2007,” linking migration explicitly to price surges and construction activity. Reducing inflows could ease demand pressure – a step Cuthbert acknowledges as possible but fails to champion.
Entrenched interests are preserving the status quo, posing a critical question about whether policymakers and banks will act boldly. However, any author’s failure to foreground halting migration as a primary solution – despite its outsized role in driving demand – renders a proposed holistic approach incomplete.
A sharper lens is required, one that argues tackling migration directly. Supply-side fixes alone will struggle to keep pace. As Australia’s housing crisis deepens, the omission of this option in mainstream discourse, as exemplified by Cuthbert, risks perpetuating a cycle where solutions remain theoretical, and the dream of affordable housing drifts further away.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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