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The ubiquitous rationale of growthism

By Tim Murray - posted Monday, 29 June 2009


Of relevance here is a study done by Bob Birrell and Ernest Healy of Monash University in 2003 entitled Migration and the Housing Affordability Crisis. While the authors acknowledge that Melbourne’s housing price spiral “cannot be attributed to recent migration levels,” they qualify their statement with significant findings. “The impact of migration varies sharply by metropolis. For Sydney the share of household growth attributable to net migration in 2001-2002 is 47.8 per cent Migration makes the next biggest impact in Perth where it is projected to contribute 33.5 per cent of household growth, then Melbourne where it constitutes 28.6 per cent of growth in 2001-2002.” By 2021, however, migration will account for 63 per cent of Melbourne’s household growth.

“Developers and builders are already heavily dependent on immigration to sustain their activities in Sydney. Within a decade those operating in Melbourne and Perth will be dependant on immigration for nearly half the underlying household growth. This will apply to Australia as a whole by 2021 when 48.4 per cent of household growth will derive from overseas migration.” It is in this context that the idea advanced by population sociologist Sheila Newman that property developers are key lobbyists for the country’s ecologically suicidal policy of high immigration becomes very plausible. As Birrell and Healy state, “It is no wonder that the housing and property industries in Australia are so keen for high migration”.

That immigration has a crucial impact on housing affordability is not immediately apprehended in any correlation of housing price increases in six major Australian cities with a given volume of migrant settlers. From 1989 to 2002 Sydney increased 30.7 per cent, Melbourne 20.5 per cent, Brisbane 45.8 per cent, Perth 23.5 per cent Adelaide 28.1 per cent and Canberra 34.8 per cent. What must be understood, however, is while certainly investors and speculators played a major role in the housing price spiral, immigration boosted their confidence, and without that the spiral would never have taken off. That is why, Birrell and Healy explain, Sydney’s housing bubble remained the strongest, for even if immigrants demanded mainly rental accommodations, “this is still vital to investors if they are to fill their properties with tenants”.

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“In the case of Sydney, the intuition of residents and some politicians that immigration is a factor in the housing affordability crisis, is correct. The absence of the immigration component of household growth in Sydney would significantly reduce the underlying gap between demand and supply. There is little doubt that a reduction in the national immigration intake would improve affordability in Sydney.”

The authors conclude by saying that “Immigration is an important underlying factor shaping growth in demand for housing prices because of its role in household formation … By 2021, according to our projections, the migration component of household formation in Sydney will be around 75 per cent, in Melbourne and Adelaide 60 per cent and in Perth 54 per cent”.

As a rule of thumb, according to Albert Saiz of the University of Pennsylvania, “an immigrant inflow of 1 per cent of a city’s population is associated with increases in average rent and housing prices of about 1 per cent .” (Journal of Economics, Volume 6, Issue 2)

By that token then, immigration has added 18 per cent to the price of Vancouver real estate, or to put it another way, it has reduced the supply of housing stock available to resident buyers and the price mechanism has adjusted accordingly.

The logic of growthism calls for an increase in supply, for more housing units through more density and/or the release or development of more land. The logic of common sense, however, calls for a decrease in demand, that is, a decrease in tax incentives for real estate investors and speculators and a reduction in migrants.

Whether it be Vancouver or Melbourne, throughout the Anglophone world, the issues are the same, cloaked in the same euphemistic code language of growthism. The choices are ours to make.

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About the Author

Tim Murray blogs at (We) Can Do Better. He is Director of Immigration Watch Canada, and Vice President Biodiversity First Canada which he co-founded. Tim is a member of Sustainable Population Australia, the Population Institute of Canada and Optimum Population Trust UK. His personal blog is at sinkinglifeboat.blogspot.com.

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