Migration is part of a complex chess game in construction, housing
It may or may not be the missing piece in Australia's housing and construction sectors, but the struggle to lure skilled migrants is seen as one of the most important issues confronting the country.
According to a very obscure online resource*, there are 318,979,564,000 possible ways to play the first four moves of chess, and in the end, just one to win.
Which way to move in response to current housing challenges is proving equally as complex, and the clock is ticking for government and industry leaders to make the next move.
Skilled migrants are one of the key pieces in addressing labour shortages and shoring up property demand but it’s not as easy as, ‘build it and they will come’.
A housing shortage nationwide is groaning with the need for new dwellings that can’t be built en-masse thanks to a labour shortage and supply chain and material delays, such as timber, putting pressure on costs and property availability.
Domestic and international migrants are being held up as post-covid beacons of hope from which a short-term, skilled workforce might be forged but in reality, visas for skilled workers are bogged down by a backlog measured in years and cost more than ever.
Australia now also competes with a global market actively trying to recruit the same workforce.
Unfortunately, governments have neglected to invest in skilling-up its local workforce in preference for skilled migrants who contribute 10 per cent more to the economy than locals, according to research from the Migration Council of Australia.
The real issue according to Queensland’s Sunshine Coast Direct Collective CEO and property expert Mal Cayley, is an undersupply of dwellings.
“Demand and construction challenges are not the problem they are a current challenge,” he said.
“The issue isn’t demand; the issue is supply and the lack of supply is from the negligence of multiple governments over multiple decades, so the solution therefore is about supply.
“The Sunshine Coast is one of the most undersupplied markets in the country and internal migration is adding fuel to prices and rents as it continues to increase the pressure for a scarce commodity,” he said.
They’re not going wait - they’re going to get married, they’re going to settle down in their home country, and they’re not going to come.
- Ben Watt, Visa Envoy migration lawyer and agent
Addressing Queensland’s parliament recently, Maroochydore MP Fiona Simpson accused the state’s government of failing to recognise the urgency or size of the housing crisis, and instead ignoring it.
“Property analysts estimate the shortage of houses required on the Sunshine Coast is about 2,000 homes per year - if you simply blame covid and interstate migration you will be doomed to miss the underlying problems and then fail to provide the right solutions to help address these issues,” Ms Simpson said.
Mr Cayley said if it were an earthquake displacing thousands of people instantaneously, the reaction would be different.
“The community would be out on the streets, crisis funding would be available, and the normal way of responding to the day-to-day would be dramatically changed.
“This is the ‘response’ thinking we need right now - immediate, all-encompassing, dramatic and pivoting,” he said.
More investment in training local workers might be a good start.
Juwai IQI’s Group Managing Director, Daniel Ho, pointed to the observation of Infrastructure Australia, which says the demand for builders is 48 per cent higher than supply.
“Australia needs more training programs to develop workers locally and it needs more migrants to fill the gaps,” Mr Ho told Australian Property Investor Magazine.
“When it comes to the overstretched construction industry, migration is absolutely necessary because Australia just doesn’t train enough skilled workers.
“Australia’s migration programs prize these skilled workers in many building trades.
“They can relatively easily obtain permanent residency and eventually citizenship.”
Domestic and international migrants are putting pressure on housing prices.
“Migration’s impact on housing prices is more local than national,” Mr Ho said.
“Census data shows that when new migrants increase the population of a particular post code by 1 per cent, housing prices there also increase by nearly 1 per cent per year.
“Nationwide, migration has contributed about 1.1 per cent to house prices per annum this century.
“That’s not enough to transform a lagging market into a booming market.”
It’s a trend seen in Perth by Paul White, Director of SMATS Group’s aussieproperty.com.
“I recently sold a property in Perth’s blue chip western suburbs with multiple offers and half of those were from eastern states buyers looking to purchase here in Perth, as they need somewhere to live and given the rental shortages, they felt it was easier to buy than rent.
“To alleviate these issues, we need to see an increase in skilled labour, however, it’s difficult because the increase in population will only place further stress on the rental market as those crossing the borders will need somewhere to live,” Mr White said.
Mr Cayley said it’s the same in Queensland.
“The volume and wide-ranging demographic profile of migrants has seen pressure in all areas of the market - even the most affordable homes have increased in price and as renters are displaced by owner occupiers, the lack of any supply has seen people pay high prices just to secure something.”
Regional migration shift
While regional Australian communities love the idea of increasing the population of their towns, the news is the same.
New data from the Regional Movers Index March 2022 Quarter Report indicates regional migration is at a five-year high and young people are driving growth.
“There are labour shortages in many parts of regional Australia and local businesses are attracting skilled and unskilled workers to increase capacity and serve growing demand for products and services,” Commonwealth Bank Regional and Agribusiness Banking Executive General Manager Paul Fowler said.
The report compiled by CBA and the Regional Australia Institute shows, by annual growth in migration, the top five Local Government Areas (LGAs) are in South Australia; including a 114 per cent increase in Ceduna, 85 per cent in Mount Gambier and 74 per cent in Port Augusta, as well as a 56 per cent increase in Western Downs, Queensland, and 56 per cent in Moorabool, Victoria.
Migration from capital cities to regional Australia increased by 16.6 percent in the March quarter of 2022, accounting for 6.4 per cent of all relocations.
There is now a slight swing of migrants heading back to the cities, nudging net migration to regions lower by 3.2 per cent.
Overall, rates are high compared to pre-covid levels, up by 97.8 per cent on the average during the two years prior to the pandemic.
The most popular destination is the Gold Coast in Queensland, attracting 11 per cent of people from major capitals in the 12 months to March 2022. The next most popular are the Sunshine Coast, Greater Geelong in Victoria, and Wollongong and Newcastle in NSW.
No magic wand
In July, there was another increase to the government lodgement fees in the skilled visa category.
Lisa Borshoff, Director of The Visa Company based in Perth, said Australia is screaming out for skilled migrants but the increase in prices means the cost to sponsor becomes almost prohibitive to a business struggling to find and employ skilled people.
“Employers have usually exhausted the local labour market by the time they consider sponsorship of foreign nationals and they are already under staffing pressure by the time the realise they must advertise on three platforms for 28 days minimum to prove they can’t find a suitable local candidate.
“Then come the costs - even excluding the optional cost to pay for assistance via a registered migration agent or lawyer, costs are in the thousands of dollars.
“Historically, the argument was made that overseas workers were taking jobs from Australians but in our experience, employers would much prefer to employ locally – it is more economical and less onerous for them to do so but the significant shortage of prospects forces them to consider sponsorship,” Ms Borshoff said.
Australia’s popularity is a blessing and a curse.
“Finding enough workers has always been a problem, but this is the first time I’ve seen it where it’s such a problem as in, there’s just nothing,” Canberra-based Visa Envoy migration lawyer and agent Ben Watt told API Magazine.
“My clients in that sector, like a tiling company or building company, cabinet makers, are really struggling because they can’t find workers to come in and fill the positions even though they’re offering very generous salaries, and it’s just impossible to find the workers to staff the businesses.
“So, that means they’re saying no to work, like a high rise that’s going up that needs all the cabinets made, but you can’t take the job, because you haven’t got enough people, and that’s also a terrible thing for the wider economy,” Mr Watt said.
Are more migrants the answer?
“I don’t think migration is a magic wand but migration can certainly help,” he said.
“There are two types of migrants that work in the construction sector. One of the major occupations is engineering, such as civil engineers, electrical engineers, structural, technical engineers, who can work on major building projects.
“You’ve got construction project managers and similar professions.
“On top of that, you’ve got young people coming in and a lot of them have got trades in their home country, so a lot of young electricians, bricklayers, irrigation specialists, and the like are coming in on holiday visas.
“It’s very, very good for the construction sector to have waves of people with trade skill sets coming in every year, as we didn’t have to spend a cent subsidising anyone at TAFE to get them,” Mr Watt said.
Right now, however, there is a backlog of visas to be processed where wait times have blown out to years. Prospective professionals and skilled workers aren’t just pinning their hopes on working in Australia.
“They’re not going to wait - they’re going to get married, they’re going to settle down in their home country, and they’re not going to come.
“It’s particularly galling, that little capricious, ‘oh, you can apply for these multiple visas, you can make a plan, but we’re not going to process it’,” Mr Watt said.
“It’s permeating the entire visa program - there’s a lot of red tape, a lot of confusion and difficulty to apply for one of these visas directly from offshore.
“For a very skilled, senior professional that has to jump through 50 hoops, and some of them paid close to $10,000, they’ve got all their papers, their family’s papers together since 2019, and they’re still waiting.
“The good ones are not going to put their lives on hold for five years waiting.
“We’re acting like they don’t have other options, but they do and they are moving to Canada, the US and other places,” Mr Watt said.
On the chess board of the construction sector, it’s looking like it’s in check and staring at the real possibility of checkmate.