Record immigration levels pushing Sydney rental market to breaking point

Record levels of immigration threaten to push Sydney’s rental market to breaking point – with many newer arrivals unable to find a home to rent or own.

New Sydneysiders – many ushered into the city to fill a desperate skills shortage – face the prospect of their Australian dream turning into a living nightmare.

New research has revealed the distressing struggle many new immigrants, keen to call the Harbour City home, face finding somewhere to live – to rent and to own.

As the Albanese government increases Australia’s migrant intake to record levels, newcomers are being hit hard by the scarcity of rental homes and skyrocketing cost of living pressures.

Immigrants face a housing shortage in Sydney. Picture: Tim Hunter.

Those factors, combined with the spike in interest rates and the challenges migrants face in gaining home loan approvals mean, for many, that homeownership could forever remain out of reach.

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According to research from real estate data firm PropTrack, buy and rent searches to Australia from overseas has hit the highest levels on record, up 44 per cent year-on-year.

The cap on migration has been lifted to 195,000 for the 2023 financial year.

Rental searches surged 89 per cent in the year to October with 30 per cent of renters looking in NSW.

PropTrack senior analyst Karen Dellow said the rise in overseas property searches indicated a flow on effect to a rise in international arrivals.

“The return of overseas migrants and investment from foreign property seekers looking to buy and rent out a property will increase demand for rental properties,” she said.

“Searches for rental properties on realestate.com.au have seen the biggest uptick since international borders reopened as most new arrivals are likely to rent before they buy.”

There has been a surge in overseas searches for Australian property.

In September, the Australian government increased the migration cap for 2022-23 to 195,000 in a bid to help fill labour shortages.

While new arrivals are more likely to rent for the first four years, Rate Money specialist mortgage manager Ryan Gair said property ownership was an important goal for migrants.

“It’s no doubt in Australia that property is the number one asset to own,” Mr Gair said. “Migrants buy into the Australian dream as well.”

He said migrants often face several hurdles when getting a home loan, such as not having an Australian credit report or being unable to use overseas property as collateral. The type of Visa held can also stand in the way.

Ryan Gair of Rate Money.

While 54 per cent of immigrants who moved to Australia between 2000 and 2016 had purchased a home, those who arrived more recently were being hit by higher housing costs and a reduced borrowing capacity, he said.

“We have seen a massive property boom,” he said. “Now on the flip side we are seeing increasing rent.”

Figures from SQM research show the number of vacant rentals in Sydney steadily declined from 20,000 in December 2021 to 9,400 in October this year while asking rent for all dwelling types increased by more than $100 a week.

Buyer’s agent Arjun Paliwal.

Buyer’s agent and property data expert Arjun Paliwal said migrants faced a difficult rental market.

“We’ve already had double digit rental growth across the country,” he said. “I’d expect much of the same for early to mid next year.”

He said the increase in migration would affect rental markets in Sydney and Melbourne while creating a double edged sword for migrants moving for better opportunities.

“It does create a bit of an imbalance where we want these job vacancies filled with skilled labour, but we’ve got a big problem – we can’t house them,” he said.

Ms Dellow said while the return of overseas migrants would increase demand for rental properties, she cautioned only 3 per cent of overall property searches in NSW came from overseas.

Amin Shariati was able to buy a home for his family. Picture: Tim Hunter.

Iranian born Amin Shariati said if he hadn’t been able to buy a home for his young family, he wouldn’t feel the same sense of security and freedom.

“Having a property is a big deal,” he said.

“You feel like a success.”

The personal trainer had struggled to get a home loan through a traditional bank as a self-employed migrant, but after meeting Mr Gair, who specialises in helping migrant borrowers, was able to buy an apartment in Lane Cove.

He has since become an Australian citizen and is now looking to upsize.

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