Unprecedented migrant arrivals intensify supply pressures
Migration has become a key force behind the rapid expansion of Australia’s home loan market, with recent figures highlighting the impact of population growth on lending and housing supply.
Industry observers note that the influx of new arrivals is reshaping demand in major cities, placing additional strain on the property sector and prompting calls for policy intervention.
Average hime loan size surges
Australia recorded its highest-ever net permanent and long-term migration in 2025, according to the Institute of Public Affairs (IPA). “Australia is experiencing an unprecedented migration surge,” said Daniel Wild, deputy executive director at the IPA. “This is unlike anything we have seen before.”
In response, the federal government has introduced measures to reduce annual migration, with forecasts suggesting a decrease from approximately 375,000 to 250,000 in 2025. Without these changes, experts warn that housing demand would have continued to escalate, further intensifying existing pressures.
Home loan data reflects the scale of this demand.
As at September 2025, the average national home loan reached $693,800, representing a 16.6% increase year-on-year. Owner-occupier home loans totalled $58.76 billion in the third quarter, up 4.7% from the previous quarter.
Existing property purchases made up the majority of these loans, while investor lending also grew by 17.3% over the year. Refinancing activity reached a record high, with $65.8 billion in mortgages switching lenders during the September quarter.
Population growth has lifted demand for both new and established homes. Although around 60% of permanent migrants already reside in Australia, the remainder contribute directly to housing needs. Factors such as financial deregulation, low interest rates and relaxed lending criteria have also supported larger and more frequent home loans.
Analysts warn that if migration-driven home loan growth continues unchecked, monetary policy and housing strategies may need to adapt. Persistent demand could sustain inflation, worsen the housing crisis, and challenge economic stability.
Upward pressure to remain
Addressing these issues will require targeted construction and improved planning. Ongoing migration and investor activity are expected to maintain upward pressure on loan values and rents in the coming year.
“Is there any wonder that a growing number of Australians want to hit the brakes on migration inflow until such a time that housing, public infrastructure and critical services are able to keep up with this rapid explosion in population?” Wild said.
“The out-of-control levels of migrant arrivals should not be blamed on the migrants. This failure belongs to the federal government alone. The numbers are clearly unsustainable.”
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