Not All Decisions Are Equal
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What is the main topic discussed in this episode?
It's The Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of The Real Estate Podcast.
Who is Brendan Coates and what housing, migration and retirement issues does he study?
We're talking with Brendan Coates, the Economic Policy Program Director at Grattan Institute, where he leads Grattan's work on tax and transfer system reform, retirement incomes and superannuation, housing, macroeconomics and migration. G'day, Brendan. Welcome into the Real Estate Podcast. Thanks very much. Good to be with you. Bit of a job description there, eh? It no doubt keeps you pretty busy, I guess, in the times that we live in.
Yeah, that's right. I think that the strength of having such a broad body of research is that you can see the interconnections between things. So housing is a classic case in point where it does have bearings on retirement incomes, on the macroeconomy, migration matters as well. But yeah, it can get pretty hectic at times. And it has been pretty busy heading into the first couple of months of this year.
Gosh, I mean, how busy were you last year?
Yeah, COVID was particularly full on. We were also looking for a house, which we actually bought. So if you're thinking of the prototype of someone who's decided for the larger house in order to have the home office, you know, we are literally, we've been living the experience of the housing market in the last couple of years.
How does migration affect Australian house prices and rents?
Well, late last year in December, the Grattan Institute did a submission to the Department of Home Affairs planning for Australia's 2022 and 2023 migration program. What I thought would be of interest to our listeners on the podcast is the forecast regarding migration affecting the housing market, which is just such an all-encompassing one, isn't it?
No, that's right. So, obviously, you know, migration, like so many other factors, does affect housing affordability. Migrants, when they come to Australia, they bring a lot of benefits. They tend to raise the incomes of Australians. They don't tend to have a big impact on the wages of Australians. If anything, the empirical, the academic research tends to suggest that skilled migration in particular tends to raise the wages of Australians, but they also add benefits.
Which types of migrants have the biggest impact on the housing market?
to housing demand. And that does mean that they probably do lead to house prices and rents being higher than otherwise. So, some of the work that we've looked at, which is actually picking up on work from the Reserve Bank of Australia from a couple of years ago, says that the boost to migration since 2005, so the increase in the numbers, has probably led to house prices and rents being about 9% higher by 2018 than they otherwise would have been. So, over a decade,
How could changing skilled migration selection reduce pressure on housing?
House prices in Melbourne and Sydney have risen by something like 70%. About 10% of that is probably because of migration.
In terms of migrants, it's all really about getting the skilled ones in, right? Is there a threshold in terms of preference that you'd like to see in terms of income levels?
Now, that's right. So the work we've done so far is on the permanent program, so giving people the permanent right to remain in Australia, so to get permanent residency. At the moment, the system works reasonably well for skilled migration, but it could work better. And the number one thing that we think should change is that the way we select permanent skilled migrants should change. So instead of having a list of occupations that we think are in shortage, when it's really hard to get any decent data on the wages of individual occupations, we should instead be thinking, well, the best measure of skill is someone's wage. And if an employer is willing to pay someone at least $80,000 a year, which is median full-time wages,
then they should be able to sponsor that person for permanent residency. And we think that would make a big difference, both in the short term to who comes as a skilled migrant, but particularly in the long term, because people who come to Australia as skilled migrants, as permanent residents, they stay for the rest of their lives.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:02–0:13
2
Who is Brendan Coates and what housing, migration and retirement issues does he study?
0:13–1:21
3
How does migration affect Australian house prices and rents?
1:21–2:09
4
Which types of migrants have the biggest impact on the housing market?
2:09–2:33
5
How could changing skilled migration selection reduce pressure on housing?
2:33–4:00
6
Why has home ownership declined for younger and lower‑income Australians?
4:00–5:58
7
What are the retirement risks for people who don't own a home?
5:58–8:09
8
When might accessing superannuation to buy a home make sense?
8:09–10:19
Speakers
2 identifiedMore from Aussie Real Estate Podcast
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Australia Housing Market Stability: Low Mortgage Arrears and Minimal Negative Equity Explained
Australia Property Prices Rising: Construction Costs, Materials and Fuel Driving the Market