New data shows the impact of immigration on house prices in Australia – realestate.com.au

Reducing migration to pre-pandemic levels would bring immediate relief to battered renters and first-home buyers, new modeling shows.

The research by independent property research group FoundIt found that cuts to migration would curb runaway prices and end the ‘structural vice’ putting pressure on the entry-level housing market.

Cutting around 100,000 people from the intake to return to pre-Covid levels would forcefully suppress growth without triggering a catastrophic housing crisis, the study found.

FoundIt’s modeling showed that matching migration with building completions would take 2 to 3 percent off national home price growth annually.

The impact would be immediate: prices in Sydney, otherwise on track for a 2 percent increase this year, would fall by about 1 percent, while prices in Melbourne, Canberra and Hobart would also fall.

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Queensland suburbs where migration has driven up prices

Suburbs of NSW, where prices would fall if migration decreased

The demand for housing remains high. Photo: Rohan Kelly

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House prices in Brisbane, Adelaide and Perth, currently red-hot, would cool to a more sustainable annual growth rate of 3 to 4 percent.

The call for a migration circuit breaker comes as the Institute of Public Affairs’ analysis shows that housing supply cannot match population growth.

According to the IPA analysis of 2025 data, the net number of permanent and long-term arrivals 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.

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These supply and demand dynamics have helped push national home prices up by about 7 percent, or nearly $80,000 by 2025.

FoundIt research head Kent Lardner said bureaucrats and politicians have recklessly ignored the demand side of the equation.

Higher levels of migration have driven up rents, which in turn has trickled down to purchasing markets, FoundIt revealed. Photo: Rohan Kelly

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“Since Covid, there has only been one issue talked about in relation to house prices, and that is supply. In reality, anyone who took economics in high school knows supply and demand of it,” Mr Lardner said.

“One thing we can control is the demand that comes from migration. It’s that simple.”

Price reduction would occur where it is needed most: the sub-$750,000 market, Lardner said.

Currently, the overwhelming number of new entrants are entering the market through rental and affordable purchase segments.

Rent increases in turn made entry-level homes more attractive to investors, sending first-home buyers and would-be landlords into brutal bidding wars for the same cheap stocks, FoundIt showed.

Opposition leader Angus Taylor has proposed cuts to migration. Photo: NewsWire/Tertius Pickard

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Removing migratory pressure on rents would provide renters and homebuyers with relief at the lower end of the market, Lardner said.

“The sub-$750,000 market is the most competitive in the country,” he said. “That’s where first home buyers who rely on small deposits and investors often compete with each other. If we ease migration it will help that market.”

Among those calling for a reduction in migration is new Liberal leader Angus Taylor, who has revealed the coalition will back plans to enforce stricter migration controls.

No specific figures for the planned influx have been announced, but Mr Taylor has hinted that arrivals will return to pre-Covid levels.

SQM Research director Louis Christopher said proposals from new Liberal leader Angus Taylor to reduce migration levels “could work” and deliver rent relief within “about six months”.

NET PERMANENT AND LONG TERM ARRIVALS

Net permanent arrivals and long-term arrivals. Source: IPA, ABS

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Noting that the Labor government has fallen behind its target of building 1.2 million new homes by 2029, he explained that migration restrictions would be most effective if implemented before 2028.

“(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.

The relief would be strongest in the gateway cities of Sydney and Melbourne, where migrants typically land first, Christopher said.

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

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The Albanian government has been criticized for the pace at which new housing is being built. Photo: David Caird

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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.”

Dr. Kevin You, a senior fellow at the IPA, called the government’s National Housing Agreement “one of the biggest policy failures of the last 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 will result in higher rents, more expensive homes and longer lines at rental inspections,” said Dr. You.

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”.

“We blame ineffective policies,” Christopher said.

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

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 themselves. You can’t blame those who want to come here for our way of life.”