Australia's housing crisis is not caused by too many migrants. It is caused by too much regulation on construction and too little accountability on housing supply.
The Sydney Times Desk is a contributing writer covering opinion and public affairs for The Sydney Times.
The Coalition's proposal to link immigration levels to home construction is politically seductive but analytically lazy. It treats a complex system failure as a simple numbers problem, and it absolves Australian governments of 30 years of policy failure on housing supply.
The ABC's August analysis identified a slow-moving collision that began under the Howard government: the deregulation of migration in the early 2000s, combined with the simultaneous expansion of building regulations aimed at climate change, energy efficiency and consumer protection. Over three decades, these two sets of policies compounded to create the housing affordability crisis Australia faces today.
Net overseas migration surged from 45,000 in 1945 to 548,000 in 2007-08, a gain of 2,490,000 people, accounting for most of Australia's population growth. At the same time, building regulations became more complex, more prescriptive and more expensive to comply with. The Productivity Commission's 2024 review of building regulation found that the National Construction Code had grown from a slender document to a 1,500-page behemoth, with compliance costs increasing by an estimated 30 percent over the past decade.
The result is a structural mismatch: population growth arriving faster than the construction system can respond. Migrants are not the cause of the housing crisis. They are the symptom of a policy failure to align housing supply with population growth.
Australia's construction productivity has collapsed. The Productivity Commission found that construction labour productivity has fallen by 15 percent over the past 20 years, while other industries have improved. The reasons are well documented: complex regulatory requirements, skills shortages, fragmented supply chains, and an industry structure that rewards low bids over efficient delivery.
The Housing Industry Association estimates that regulatory costs now add between 25 and 35 percent to the cost of building a new home. These costs include planning approvals, building certifications, infrastructure contributions, BASIX energy requirements, and the cumulative impact of state and local government regulations. In Sydney, the total regulatory cost of a new dwelling can exceed $80,000.
The National Housing Accord commits the NSW Government to delivering 377,000 new homes by mid-2029. As of July 2026, NSW was tracking about 40 percent behind the rate required to meet that target. The gap is not because migrants are arriving too quickly. It is because the construction system cannot build homes quickly enough under current regulatory settings.
The Coalition's proposal to cap migration based on housing completions sounds reasonable until you examine the incentives it creates. If migration falls because construction is slow, the result is labour shortages in the very sectors needed to build more homes: construction, healthcare, education and infrastructure. Migrants are not just consumers of housing. They are also the workers who build it, staff our hospitals and run our aged care facilities.
The proposal also ignores the structural factors that constrain housing supply. Even if migration were capped tomorrow, the pipeline of approved developments, the availability of skilled trades, the capacity of the construction industry and the financing conditions for developers would not change. The housing supply would remain constrained, and the affordability crisis would persist for existing residents.
The base case, according to Australian Property Review, is continued pressure in Sydney with some relief if construction improves. The upside case is a faster lift in completions and a steadier rental market. The downside case is migration stays elevated, building remains constrained and affordability worsens again.
The NSW Government has taken steps to address the supply side of the equation. The Planning System Reforms Act 2025 modernised the Environmental Planning and Assessment Act 1979, cutting assessment times by close to a third and increasing housing approvals by 20 percent from 2023. The Housing Delivery Authority has created a pipeline of 150,000 potential new homes in 18 months. The Low and Mid-Rise Housing Policy has unlocked an estimated 112,000 new homes across Greater Sydney, the Hunter, the Central Coast and the Illawarra-Shoalhaven.
These reforms are necessary but insufficient. The Sydney Plan, released in August 2026, sets a target of 800,000 new dwellings by 2046. To achieve that target, NSW needs to complete approximately 32,000 homes per year for the next 20 years. The current completion rate is around 24,000 per year. The gap of 8,000 homes per year is not a migration problem. It is a construction productivity problem, a planning bottleneck problem and a financing problem.
The solution is not to cap migration. It is to fix the construction system. That means reforming building regulations to reduce compliance costs without compromising safety, investing in skills training to address the trades shortage, improving the financing environment for medium-density developments, and reforming the planning system to reduce approval times. It also means governments at all levels accepting responsibility for housing supply rather than blaming migrants for policy failures they cannot control.
The debate about migration and housing is a distraction from the harder questions. Australia has a planning problem, a construction productivity problem, an infrastructure funding problem and a credit cycle problem. Migration adds pressure because it moves faster than the housing system can respond. But blaming migrants for the housing crisis is like blaming passengers for a delayed train. The passengers are not the problem. The system is.
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