Housing alert issued amid high immigration to Sydney – realestate.com.au

Cutting record immigration would put a brake on Sydney’s skyrocketing house prices and rentals, providing immediate relief to battered renters and homebuyers, new modeling shows.

The FoundIt analysis of construction supply and population growth showed that a reduction in the influx of newcomers would cause an “almost immediate” shift in the housing market.

It showed that house prices in Sydney, otherwise on track for a 2 per cent rise this year, would fall by around 1 per cent if migration inflows fell by 100,000 people, bringing inflows back in line with pre-Covid averages.

The declines were expected to be much greater in outer-city areas with a greater supply of new homes, along with inner-city areas with an abundance of newly built high-rise apartments.

Critics of the Albanian government’s immigration policy have noted that construction supply remains below the Housing Agreement targets of 1.2 million new homes by 2029. Photo: Hilary Wardhaugh

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Growth in subsequent years would stabilize or “level off,” according to the FoundIt study, which also examined how deep cuts to migration affected comparable housing markets abroad such as New Zealand and Canada.

“Prices in Sydney are so high that a few (percentage) points of growth makes a huge difference,” said Kent Lardner, head of research at FoundIt.

MORE: Migrant, in Aus as a student, has 56 houses

Mr Lardner, a pioneer in the world of Australian property data, said part of the reason this change would be immediate is due to the huge impact immigration has had on prices and rentals in recent years.

Migration levels have had a significant effect on the market and a temporary pause back to 2010s levels would give building supply time to catch up, he said.

“The danger if migration remains high is not that Sydney will become seriously unaffordable, it already is. The danger is that Sydney’s entry-level market could disappear altogether,” Lardner said.

Suburbs likely to see some of the biggest improvements in affordability are those with some of Sydney’s few remaining deals under $750,000, FoundIt revealed.

This included house prices in the suburbs of Lakemba, Canley Vale, Canley Heights, Warwick Farm, St Marys and Auburn.

These suburbs had attracted strong investor activity due to migration-induced rent increases. This investor activity would decline if migration slowed, easing pressure on prices, FoundIt revealed.

The calls for a migration circuit breaker come after an analysis of ABS data by the Institute of Public Affairs showed that housing supply has failed to match population growth.

According to the IPA analysis of 2025 ABS data, the net number of permanent and long-term arrivals into the country reached a record 480,520, surpassing the previous record set in 2023 by 7 percent.

At the same time, the number of residential permits fell by 15 percent annually in December 2025.

These supply-and-demand dynamics have helped push Sydney house prices up by 7 per cent, or about $103,000, by 2025.

KILLARA: A three-bedroom apartment in this luxurious new block was sold for $2.78 million in February 2026 to a supposed newcomer, who reportedly paid in cash, without a mortgage.

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Dr. Kevin You, a senior fellow at the IPA, called the government’s National Housing Agreement one of the “biggest policy failures” of the past 25 years.

“You don’t have to be an economist to know that a flattening of housing supply and a large migration-driven increase in housing demand results in higher rents (and) more expensive homes,” Dr You said.

It should be noted that the ABS figure for net overseas migration, another measure of arrivals, was 306,000 in 2024/25 – well above pre-Covid levels, but down from 429,000 the year before and a peak of 661,000 in 2022/2023.

Plus Agency director Peter Li, who along with team Fiona Yang and Mahan Shishineh are marketing new developments to foreign buyers, said most are buying to avoid a permanent move to the country.

Property agent Peter Li said overseas-based buyers preparing to move to Sydney are one of the biggest markets for off-plan units. Photo: Sam Ruttyn

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“About 80 percent of our foreign buyers are preparing to come here,” he said. “They have no intention of going naked. They come with a lot of capital to buy… and not just to rent.”

“Reducing migration would have a huge impact. They are the largest market for new construction (units).”

SQM Research director Louis Christopher said the Labor government has fallen behind its target of building 1.2 million new homes by 2029 and that cuts to migration would be most effective if implemented now.

“(Intake) should have been reduced years ago,” he said.

Mr Christopher said the biggest impact of a temporary reduction in migration inflows would be on rental prices.

“If migration were to decrease, you would see rental prices in Sydney and Melbourne drop,” Christopher said.

This six-bedroom Lindfield home reportedly sold for $4.68 million in February to an overseas buyer preparing to settle in Sydney within weeks.

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He noted that skyrocketing rents during the post-border reopening period were the “direct result of population growth, driven in large part by excessive migration.”

Experts emphasized that the problem lay with the political leadership, not the newcomers.

Mr Christopher pointed to the “political reluctance” to meet demand, noting that proposing temporary, cyclical cuts to deal with our broken housing supply should not be a “political issue”.

“There is a time and place for strong migration, and time and place for weaker migration. We are in a period where we need weaker migration,” he said.

Dr. You added: “The blame for the problems caused by out-of-control mass migration in recent years should be pointed squarely at the federal government, not the migrants.”