WEBVTT - 'The more people in Australia, the more demand for houses' calls for immigration decrease to help Aussies buy a home. 0:00:00.160 --> 0:00:04.160 I'm Shane Oliver, chief economist at AMP, says more migrants 0:00:04.160 --> 0:00:06.960 from overseas will push up demand for housing and keep 0:00:06.960 --> 0:00:10.320 runaway home prices out of reach for young Australians. Of course. So, 0:00:10.680 --> 0:00:14.080 Shane Oliver, I mean, it would be self-evident, would it not? 0:00:15.280 --> 0:00:18.480 It's it certainly is self-evident that you have more people 0:00:18.480 --> 0:00:20.840 in Australia. It's going to mean more demand for houses. 0:00:20.840 --> 0:00:23.440 So I don't think there's any surprise in that. I 0:00:23.440 --> 0:00:26.840 guess the surprise is that the numbers still remain very high. 0:00:27.000 --> 0:00:31.240 We used to have, say, 230,000 immigrants each year in Australia, 0:00:31.240 --> 0:00:34.199 whereas that numbers are currently running around 300,000 or just 0:00:34.200 --> 0:00:37.600 a bit above. And that obviously means strong ongoing demand 0:00:37.600 --> 0:00:41.040 for housing, particularly on the back of several years of 0:00:41.040 --> 0:00:43.840 immigration levels being much, much higher. 0:00:44.360 --> 0:00:47.559 And and would it be fair to say that if 0:00:47.560 --> 0:00:51.280 the government won't address that issue, then they're not serious 0:00:51.280 --> 0:00:54.520 about making housing more affordable for young Australians? 0:00:55.640 --> 0:00:58.320 Well, I can I think you'd debate whether they're serious 0:00:58.320 --> 0:01:01.960 or not. But the reality is that to seriously address 0:01:02.360 --> 0:01:06.240 housing affordability, you have to address the imbalance between the 0:01:06.240 --> 0:01:09.440 supply of housing on the one side and the demand 0:01:09.440 --> 0:01:13.400 for housing, which comes from high immigration levels. Uh, I 0:01:13.520 --> 0:01:15.280 think you have to do a mix of both. You 0:01:15.280 --> 0:01:17.360 have to get you have to get immigration levels back 0:01:17.360 --> 0:01:20.840 down to more sustainable levels, perhaps below the levels we 0:01:20.840 --> 0:01:23.910 had pre-COVID. And at the same time, you've got to 0:01:23.910 --> 0:01:26.350 make it easier to supply more homes. So to be 0:01:26.350 --> 0:01:28.150 serious about it, you've got to do both. I think 0:01:28.190 --> 0:01:31.310 fiddling with capital gains tax and negative gearing, those sorts 0:01:31.350 --> 0:01:34.270 of things may be appealing, but they don't solve the 0:01:34.270 --> 0:01:37.750 underlying problem of a chronic undersupply of housing in Australia. 0:01:37.790 --> 0:01:40.350 So Shane, what's your expectation with regard to so negative 0:01:40.350 --> 0:01:43.389 gearing is still allowed, but it's only allowed for new homes. 0:01:43.390 --> 0:01:46.590 So is your expectation that that will actually generate demand 0:01:46.590 --> 0:01:47.950 for the building of new homes. 0:01:48.910 --> 0:01:53.630 Well, that's the theory. But in reality, most estimates are 0:01:53.630 --> 0:01:56.390 and most analysis suggest that won't be the case, because 0:01:56.630 --> 0:02:00.350 the reality is you're still discouraging a group of people, 0:02:00.350 --> 0:02:03.310 investors in this case, from investing in the property market. 0:02:03.310 --> 0:02:05.390 And they account for a big chunk of new home 0:02:05.390 --> 0:02:09.389 supply to the market. Even Treasury or the government in 0:02:09.389 --> 0:02:12.070 the budget papers released Tuesday night. If you go to 0:02:12.070 --> 0:02:15.710 page 158, a budget paper, number one, they actually estimate 0:02:15.710 --> 0:02:18.390 that over the next ten years, that will be 35,000 0:02:18.430 --> 0:02:21.510 less homes built in Australia as a result of the 0:02:21.510 --> 0:02:25.430 changes to the tax system. So in reality, it won't 0:02:25.430 --> 0:02:28.350 boost housing supply. It will actually reduce it. I think 0:02:28.350 --> 0:02:31.190 that's why they've had to announce that other policy to 0:02:31.430 --> 0:02:35.310 to invest $2 billion in critical infrastructure for housing. But 0:02:35.310 --> 0:02:38.590 but the tax change itself is estimated to actually reduce 0:02:38.590 --> 0:02:40.710 the supply of housing, not increase it. 0:02:40.910 --> 0:02:43.350 Shane, always lovely to speak with you. Shane Oliver, chief 0:02:43.350 --> 0:02:45.390 economist at the AMP.