Big influx boosts growth but heightens housing pressure

In a result underlining the significance of the immigration program to the nation's growth, official figures show net overseas migration accounted for more than 80 per cent of the increase in population in the 12 months to March this year.

More than 681,000 people arrived from overseas while less than 227,000 departed, pushing net overseas migration to 454,400. Natural increase was a much more modest 108,800.

During the same period, an additional 8900 people moved to Canberra, pushing the territory's resident population to almost 465,000 people.

The fastest growing state was Western Australia, which expanded by 2.8 per cent while the slowest was Tasmania, which increased 0.4 per cent. The ACT's growth rate of 2 per cent was marginally lower than the national average of 2.2 per cent.

Australia has one of the highest population growth rates among advanced economies and national accounts figures show that this helped prop up the economy in the June quarter.

But the big influx of people is also adding to pressure in the nation's tight housing market.

Home building approvals have tumbled by more than 10 per cent in the past year as interest rates have soared, and Master Builders Australia estimates work began on less than 174,000 new homes last financial year, a 16.5 per cent drop.

It reckons new housing starts will fall a further 2.1 per cent this financial year to just 170,100 homes, which chief executive Denita Wawn said was well short of the 200,000 a year the country needs.

The central plank of the federal government's housing policy, the Housing Australia Future Fund, will be established after enabling legislation was passed by parliament on Thursday.

The $10 billion initiative aims to fund 30,000 new social and affordable homes in its first five years, which Housing Minister Julie Collins would be the biggest such investment in more than a decade.

"[It] means more home sin every corner of this country. More homes for women and children impacted by family and domestic violence, more homes for older women at risk of homelessness, more homes for our veterans who need a safe space to spend the night," Ms Collins said.

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But critics argue it falls well short of what is needed and will do little to relieve the plight of many currently experiencing house stress, including renters, those with a mortgage and people aspiring to break into the property market.

The Australian Housing and Urban Research Institute said first home buyers continue to face significant financial barriers to entering the market.

It said a prolonged period of low interest rates and initiatives like first home owner grants and tax concessions had made the challenges facing first home buyers worse rather than better.

Research undertaken by the institute found that such buyers had become increasingly reliant on parental support, including inheritances, direct financial assistance and free accommodation in the family home, in order to be able to afford to buy into the property market.

Reflecting this, the average age of new home buyers had grown from 26 years in the late 1960s to 31 years .

"While high house prices are often cited as the biggest challenge faced by first home buyers, our Inquiry highlights that the problem is significantly more complex,", researcher Stephen Whelan of Sydney University said.

Professor Whelan said "politically seductive" solutions such as first home owner grants had not worked and mix of approaches was needed.

He said the ACT government's reform to abolish stamp duty for first home buyers was "heading in the right direction", and suggested governments also consider mortgage guarantees, shared equity schemes alternatives such as rent to buy.