Migration, Housing Supply and Australia’s Rental Crisis, With Leith Van Onselen

Australia added 478,000 people in a single year while building 175,000 new homes. The math does not work. Leith Van Onselen, one of Australia’s most prominent economic commentators and co-founder of MacroBusiness, joins Reece Beddall and Lachlan Delahunty to break down exactly why Labor’s migration policy is driving the rental crisis, how the federal government’s dependence on personal income tax revenue is distorting housing policy, and the three changes that could actually turn this around.

The Migration and Housing Supply Gap: The Numbers

The gap between population growth and dwelling completions in Australia is not a short-term fluctuation. It is a structural problem compounding every year. At 478,000 net overseas migrants in a single year against 175,000 dwelling completions, the shortfall adds to an already depleted rental stock. Vacancy rates nationally are sitting at 1.0 to 1.5 percent against a decade average of approximately 2.5 percent. Rents grew 5.9 percent in the year to May 2026, the strongest pace since September 2024.

Leith Van Onselen’s argument is that this outcome is not accidental. Running migration at the current rate into a supply-constrained market is a deliberate policy choice that serves specific economic and political objectives while crushing living standards and productivity for ordinary Australians.

Why the Government’s Housing Affordability Response Is Structurally Misaligned

The federal government’s response to housing affordability has focused primarily on demand-side interventions: low-deposit schemes, shared equity programs, and help-to-buy initiatives. None of these interventions add supply. All of them add purchasing power into a supply-constrained market, which pushes prices higher for the buyers who do not qualify for the schemes.

Leith Van Onselen’s analysis of the incentive structure is specific: the government relies on rising property values to support consumer confidence and income tax revenue from capital gains. A genuine supply response that moderated price growth would reduce that revenue base. The policy settings reflect that incentive, even when the stated objective is affordability.

Three Policy Changes That Could Actually Help

Leith Van Onselen identifies three specific policy changes that would make a material difference to Australia’s housing supply crisis: a recalibration of migration volumes to levels that the current construction capacity can absorb, zoning reform at the state and local government level to enable more medium-density construction near employment centres, and a shift in infrastructure funding models that makes greenfield development economically viable for private developers without requiring taxpayer subsidies.

Whether those changes are politically viable is a separate question. The episode does not pretend otherwise. But understanding the actual levers is the starting point for every property investor trying to anticipate how the market evolves from here.

Published: 01 Jul 2026