The housing market is a complex beast, and the recent focus on falling house prices is just one part of the story. While it's true that high interest rates are here to stay, and this will continue to impact house prices, there are other factors at play that are often overlooked. One of the key drivers of the housing market is migration. The Labor government's target of 225,000 net overseas migrants per year is a significant lever in controlling housing demand. However, this target is demand-driven and not easily controlled, as evidenced by the 2022-23 net overseas migration of 513,000, which was far higher than the forecasted 180,000. If the government wants to reduce net overseas migration to 225,000, it will need to intervene in skilled migration, which could be a challenge given the current shortage of tradies. This is a delicate balance, as the government also has a target of building 1.2 million homes over five years under the National Housing Accord. While states and local councils can release land and increase height limits, the lack of people and developers to build these homes could be a significant hurdle. The housing market is a complex interplay of interest rates, migration, and supply and demand. While high interest rates will continue to weigh on house prices, the role of migration and the availability of builders and developers cannot be overlooked. It's a fine balance that the government and the housing market must navigate carefully to ensure a stable and affordable housing market for all.
