Following hot on the heels of the announcement that the federal government plans to increase the commitment to its affordable rental housing scheme, comes the suggestion that Australia should take in as many as 15 000 immigrant construction workers to help build new housing. The proposal has been put forward by the Housing Industry Association and does recognize one important point: even with extra financial incentives for investors to construct new low cost dwellings, who is actually going to build them?
The national skills shortage has been the focus of just as much debate as the housing affordability crisis, and was one of the reasons that the 457 visa program became open to exploitation and abuse. The plan calls for similar visas to be issued to foreign workers to help construct new housing. The workers would most likely come from the United States where the dramatic housing market downturn has seen many construction workers thrown out of a job.
Here in Australia, there are also pressures that might push the market towards a downturn, including the credit crunch, rising interest rates, and prices already falling in some areas. The thing holding prices up in many cases is a shortage of supply, coupled with an increasing gap between the battlers and the affluent which has seen high income earners in a position to keep paying high prices for premium properties. None of this does anything to encourage investment at the lower end of the market, where tenants are now desperately competing for affordable rentals.
The risk of course is that a sudden increase in supply could trigger a more serious decline in prices which would be attractive to some, but devastating for those already invested in the market. In fact, that is exactly what is already happening in those parts of Sydney where values are falling and repossessions are rising. That is a problem which could easily spread much more widely in the community.
If the government approves of the proposal to import 15 000 construction workers, there is one more question to consider. Doesn’t that mean that we will then need a further 15 000 houses beyond the 30 000 shortfall that we already have?