How a political earthquake in Canadian immigration policy could dramatically shape Australia’s housing crisis

A political earthquake in Canada later this year could see Australia abandon its addiction to high-immigration policies that are fueling the housing crisis.

Like Australia, Canada is also one of the highest population growth countries in the world, and is importing record numbers of skilled migrants to fill labor shortages.

Now it’s almost as expensive to buy a house in Vancouver, Canada as it is in Sydney.

Sydney is the second most unaffordable market in the world when average house prices are compared to middle-income household incomes.

But Vancouver ranks third on US think tank Demographia’s 2022 list of the world’s most unaffordable cities, with Hong Kong considered the worst.

In Australia, the centre-right Liberal Party led by Peter Dutton is struggling to gain the support of younger voters, but in Canada the opposite is happening.

Conservative Party opposition leader Pierre Poilievre is beating photogenic centre-left Liberal Prime Minister Justin Trudeau to win over voters under 30.

The 44-year-old alternative prime minister has done this by calling for a reduction in immigration so that population growth can match the supply of new homes.

“We need to make a connection between the number of houses built and the number of people we invite as new Canadians,” Poilievre said at a media conference in Winnipeg earlier this year.

Mr. Poilievre also promised that a Conservative government led by him would “return to an immigration approach that invites a number of people who we can house, employ and care for into our health care system.”

His approach appears to be working: a Financial Times analysis of YouGov and Abacus Data polls shows the Conservative Party of Canada winning 40 percent of under-30s.

That’s a big turnaround from a 50-point deficit in 2021 for the party that has been out of power since 2015.

In Australia, younger voters are abandoning the Liberal Party, while the conservative Center for Independent Studies finds that only 26 percent of Gen Z voters born between 1997 and 2004 will cast first preference votes for the Coalition in 2022.

This was significantly lower than among millennials – born between 1981 and 1996 – who gave 35 percent support for the coalition in the early 2000s.

That number had dropped to just 25 percent by 2022.

The Center for Independent Studies suggested Australia’s Liberal Party would struggle to attract Millennial and Gen Z votes if they were unable to buy a home.

“In the absence of a concerted effort on the part of the coalition parties, it would be unwise to assume that younger generations of voters will move to the center-right as they age, as Boomers and Gen X did,” the report said.

“Millennials and Gen Z will only move to the right if center-right political parties give them a reason to do so.

‘If the impression is that the coalition parties do not offer solutions to the social and economic problems that are important to millennials and generation Z, there is no incentive for these generations to vote for them.

“Currently available evidence suggests that housing affordability and climate change are policy issues of particular concern to younger voters.”

The average house price in Australia was $933,800 in December, new official data released on Tuesday showed.

A borrower purchasing this property would have to earn $143,662 to get a loan, which rules out most single borrowers unless they buy with a friend or find a partner.

This is also well below the home price of $639,375 that an average income earner can afford, if they borrow at the maximum.

That’s because an average full-time worker earning $98,518, with a 20 percent mortgage down payment, can borrow a maximum of $511,500 — or up to 5.2 times pre-tax salary.

Sydney’s median house price of $1.396 million is also so expensive that someone would have to earn $215,000 and be in the top two percent of income earners to buy alone.

Australia’s population growth rate of 2.4 percent in 2022-2023 was among the highest in the developed world, with Canada among the few with an even higher growth rate of 2.9 percent.

Australia’s net immigration level of 518,000 was a record for a country of 26 million people, while Canada imported a record 1,131,181 migrants into a country of 41 million people.

“International migration was responsible for 98 per cent of Canadian growth in 2022-2023,” Statistics Canada said.

“These high levels are related to the Canadian government’s efforts to alleviate labor shortages in key sectors of the economy.”

Poilievre’s pledge to cut immigration to match the supply of new housing has made his Conservative Party the favorite to win the October election, with the Tories receiving 41 percent support in the last Legislative tracking poll, compared to 25 percent for the Liberal Party. and 18 percent for the New Democratic Party.

In Australia, the latest Newspoll shows Labor leading the coalition 52 percent to 48 percent, following Greens preferences that attract younger voters.

Andrew Bragg, the new opposition shadow minister for home ownership, made no mention of high immigration in a Tuesday press release but campaigned on allowing young people to withdraw their pensions to buy a home.

The Coalition ramped up immigration under former Prime Minister John Howard, who saw net levels double from 100,000 in 1999 to more than 200,000 by the time he left office in 2007 after losing to Labour’s Kevin Rudd.

The Howard government also introduced a 50 percent capital gains tax rebate in 1999, meaning investors and landlords only had to declare half of the profits on their tax returns for that financial year.

One of his Liberal successors, Scott Morrison, was re-elected in 2019 and opposed then Labor opposition leader Bill Shorten’s plan to halve the capital gains tax credit to 25 percent and abolish negative tax breaks on future purchases.