I just finished reading Alan Kohler's outstanding essay, Great Divide - Australia’s housing mess and how to fix it , which delves into the current state of Australian housing and, in particular, the inequalities woven throughout. First off, it's brilliantly written and thoroughly researched, shedding much-needed light on this complex issue.
However, I felt two critical areas were overlooked. The first concerns immigration. The essay took a black-and-white approach, hinting that reducing immigration could be part of the solution. But in my view, the real answer isn’t just about the numbers; it's about the composition. We need a more strategic mix, especially of skilled migrants who bring expertise in areas essential to housing delivery, and can boost production. This isn't simply about increasing or decreasing immigration but about ensuring the right skills come in to support housing development.
The second gap is in incentivizing cost-effective production - nudging developer over the line to move from feasibility to production. We all know there are sites across Australia that remain undeveloped, not because developers are "land banking" in some strategic way, but because the projects just don’t make financial sense under current conditions. Between high building costs and rising funding expenses, many projects aren't viable particularly on a risk adjusted basis. I would have loved for Kohler to explore what those nudges might be that move projects into production and make land banking less attractive but in a way that doesn’t generate political fallout for decision makers - if that is at all possible.
These two points—revisiting immigration policy with a focus on skill diversity and creating better incentives for production over land banking—are crucial for the debate on Australian housing. Addressing them could move us closer to real solutions. Nonetheless The Great Divide remains an excellent read. It's part of the Quarterly Essay series, issue 92, and it’s well worth a look if you’re interested in understanding more about the state of Australian housing today.
If this topic has got you thinking, don't miss our podcast episode of Buildipedia, where we dive deeper into the challenges of the housing market with Simon Croft, Chief Executive of the Housing Industry Association (HIA). Plus, dive deeper into Alan Kohler’s Great Divide in our latest review, where we break down the regulatory factors impacting affordability.
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