Property Council in push to boost immigration

The hard-hit property industry is calling for a return to pre-coronavirus levels of immigration to support growth.

The Property Council has called for a new migration plan it has dubbed ‘Welcome to Australia’. Picture: AAP

The hard-hit property industry is calling for a return to pre-coronavirus levels of immigration to support the growth of major cities as it looks to ensure that the employment-generating housing sector does not fall into a deep recession.

The Property Council of Australia has called for a new migration plan it has dubbed a “Welcome to Australia” scheme, pitched as helping to provide skills, people and population growth, and defies calls for a slowdown in migration.

The peak body argued the economy required migration programs that could be accompanied by secure testing, isolation and tracing arrangements for international arrivals, to protect public health and facilitate business ­travel.

The powerful council called for a tourism-style international advertising campaign promoting Australia as a safe and healthy destination to visit, study, work and make a new life. This would be allied with target temporary visa classes that could make an immediate impact on economic growth, with the scheme to be matched by incentives for permanent skilled migration.

Property developers and investors are facing an increasingly tough environment that extends well beyond the turmoil between shopping centre landlords and major chains that are shrinking their holdings.

There are also concerns about city buildings and the ability of developers to get their projects started, even as some states cut red tape and look to reduce inefficient taxes, including stamp duty.

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The comments came as the Reserve Bank board warned of a slump in commercial property rents, according to the minutes of the central bank’s May meeting released on Tuesday. The RBA board noted a potential fall in the number of new projects coming on stream.

“A large amount of new office space was expected to be completed in Sydney and Melbourne in 2020,” the minutes said. “Members noted that demand was not expected to keep pace with stronger supply in the near term and therefore it was likely that ­vacancy rates would rise and ­office rents would fall.”

Problems are also hitting the established housing market, particularly in areas that had relied on tourism inflows to fill up space.

“At the same time, the supply of rental housing had been boosted as properties that had previously been offered as short-term accommodation were shifted to the long-term rental market,” the RBA minutes said.

Qualitas chief executive Andrew Schwartz said distress in property took time to be reflected in the market due to a lag affect. “However, with the short-term ­issues around unemployment, lack of immigration, social distancing and mass business insolvencies, it is reasonable to expect that certain segments of the property market will come under pressure later in the year,” he said.

Mr Schwartz said the residential sector would be affected by lack of immigration in the short term, but said the area was “defensive” as there were few new starts occurring in the major cities and immigration would return on the other side of the health crisis.

“Australia will showcase what an incredible and wonderful place this country is to live and those that were planning on migrating to a western English speaking country will prioritise Australia,” Mr Schwartz predicted.

But suppliers are concerned about short-term pain, with Adelaide Brighton chief executive Nick Miller saying forecasting for residential and multi-residential markets was murky, with bearish expectations that there could be a decline to 80,000 starts next year. He also called for a focus on infrastructure spending and getting shovel-ready projects to market.

The peak property body is calling structural reforms. In a seven-point plan for economic recovery after COVID-19, the Property Council urged state and federal governments to consider incentives for new housing construction, broadbased tax reform, improving the supply of ­affordable housing, and the renewal of the migration program.

“Some big and bold thinking is required to get the Australian economy going again after the impact of the COVID-19 pandemic,” Property Council chief executive Ken Morrison said.

“As Australia’s biggest employer which contributes over 13 per cent of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments.”

The council has proposed a $50,000 “New Home Boost” scheme to kickstart construction for new housing that could launch the construction of 50,000 new dwellings, supporting more than 200,000 jobs, by bringing forward market demand for new housing.

State and territory governments could also initiate additional demand stimulus through first-homebuyer grants, stamp duty and foreign investor surcharge relief.

The council is lobbying for broadbased tax reforms to boost productivity and increase living standards, including the abolition of stamp duty and replacing this revenue by broadening the GST base in the medium term. It is also wants the government to retain negative gearing and capital gains tax settings and for the removal of foreign tax surcharges to encourage international investment.