The REAL reason for soaring house prices, according to the Greens – and it’s NOT because of immigration (or climate change)

The Greens claim high immigration is not the cause of soaring house prices or Australia’s rental crisis – but says it is actually down to negative gearing.

Hundreds of thousands of immigrants are still arriving in Australia and boosting population growth, with a net 432,400 landing in the country in the year to January.

Meanwhile house prices in Brisbane, Adelaide, Perth and parts of western Sydney soared by double-digit figures in 2024, despite the 13 recent interest rate rises.

But Greens housing spokesman Max Chandler-Mather says 2021’s record property price rises – when Australia was closed to migrants during Covid – proves there is no link to immigration.

‘Firstly, let’s think about Covid – during that period, we had negative migration,’ he told Triple J’s Hack program on Thursday.

‘There were more people leaving the country than arriving, to the tune of tens or even hundreds of thousands.

‘[But] house prices went up at record rates, record rates, in the middle of that period where we had zero migration.

‘We’ve had a test of what happens when you get migration to zero, house prices keep going up.’

Australian house prices soared by 24.5 per cent nationally in 2021. Sydney had even stronger growth of 29.6 per cent and Brisbane values soared by 30.4 per cent, CoreLogic data showed.

However the exploding property market was also fuelled by the record low Reserve Bank interest rate of just 0.1 per cent.

Banks were offering fixed and variable mortgage rates under three per cent, triggering investors to snap up real estate, before borders eventually reopened.

But Mr Chandler-Mather argued negative gearing was chiefly responsible for driving up house prices.

The Greens now want to restrict those tax breaks to just one investment property rather than scrap it altogether.

‘The two biggest problems with the housing system right now are, one, the government gives hundreds of billions of dollars in tax handouts to property investors,’ he said.

‘What that does is put money in their pockets to bid up the price of housing and turbocharge house prices.’

Mr Chandler-Mather claimed big banks were campaigning against high immigration, despite bank chiefs publicly speaking out in favour of it.

‘This often happens in the middle of a housing and cost-of-living crisis – people attached to the big banks or big financial interests will turn around and try and blame migrants,’ the Greens MP added:

House prices in Brisbane , Adelaide , Perth and parts of western Sydney soared by double-digit figures in 2024, after even the Reserve Bank had raised interest rates 13 times (pictured is a Sydney auction)

But Commonwealth Bank chief executive Matt Comyn last year suggested high immigration was good for banks, considering higher population growth meant more customers.

‘Undoubtedly, the strong population growth and migration growth is a big tailwind for the Australian economy and clearly the Commonwealth Bank is a beneficiary of higher economic growth,’ he told a results presentation.

The Business Council of Australia, which represents the big banks, has been a vocal advocate for high immigration, with its former chief executive Jennifer Westacott arguing migrants should not be blamed for the housing crisis.

‘Migration should not be the scapegoat for poor planning and the failure to deliver housing supply,’ Ms Westacott said in 2023.

The Grattan Institute think tank and a range of economists have suggested reducing immigration would ease pressure on the rental market, with SQM Research data showing the capital city vacancy rate tight at 1.3 per cent.

The rental crisis has eased since Australia’s net overseas migration rate moderated from record-high levels approaching 550,000 in late 2023.

The annual growth in Sydney’s median house rent, of 3.3 per cent during the March quarter, was the slowest since 2019 before Covid, Domain data showed.

Sydney renters, however, are still typically being charged $775 a week for a house. 

Domain’s chief of research and economics Nicola Powell said renters were still in a worse position than landlords. 

‘Despite a softening of growth, the data suggests Australia is still very much a landlord’s market,’ she said.