Migrant slump hammers east coast rental market
The east coast property market is set to bear the brunt of ongoing border restrictions as the rate of population growth dips to World War I levels.
The east coast property market is set to bear the brunt of the ongoing border restrictions as the rate of population growth dips to World War I levels.
Net migration has accounted for three fifths of Australia’s population growth for the past several years and has long played an important role in the property market. Without the flow of people from overseas, demand for housing is set to return to that last seen in the 1990s, with Sydney and Melbourne rental markets likely to suffer heavily, according to property researcher CoreLogic.
Numbers from the Treasury show population growth is likely to shrink from 1.4 per cent pre-COVID-19 to 0.6 per cent by June 2021. In real terms, the change reflects a 56 per cent drop in new arrivals from 350,000 to 154,000 over the period, similar to levels seen in 1917.
COVID-19 border restrictions are predicted to see this pool of people total just 31,000 in the 2020-21 financial year, compared to the 232,000 net migrants who arrived in 2018-19.
Last year, Sydney and Melbourne became home to 84 per cent of migrants who moved to Australian capital cities. CoreLogic’s head of research Tim Lawless said of these, 70 per cent would choose to rent rather than buy.
The impact on the market has been immediate. Between March and early August, the number of homes available for rent in Melbourne’s Southbank rose by 117 per cent to reach 1230 listings. Rental ads were up 111 per cent across Sydney’s combined CBD, Haymarket and The Rocks region to reach 776 and Melbourne’s CBD saw a 105 per cent lift in advertised listings taking the total number of homes available to rent to 2184.
Mr Lawless said these areas were particularly popular with investors looking to take advantage of normally strong demand from migrants and overseas students.
“High density, multi-unit dwellings in these precincts are popular with investors due to what has historically been strong rental demand. This historically strong rental demand was underpinned by overseas student numbers, but also domestic students, visitors and workers requiring accommodation close to the CBD,” Mr Lawless said.
“The impact of the recent sharp fall in overseas arrivals can already be seen in surging inner city rental advertisements, with rental listings more than doubling across some key inner city unit precincts.”
Outside of the country’s two largest housing markets, demand created by migration will play a less significant role. Regional markets only received 16 per cent foreign settlers last year, with the biggest recipient being regional Queensland.
This was largely due to a larger number of long-term visitors and those on working holidays.
More Coverage
Room with a view: Tassie east coast gem hits market
This four-bedroom home near Bicheno on Tasmania’s east coast offers uninterrupted ocean views – and even has a dedicated crayfish cooking station. Price: $4.5 million-plus.
’People who take advantage of negative gearing are not the bad guys’
He’s the former radio DJ turned authority on all things architecture and design. Now, Tim Ross turns his attention to how home ownership became an enduring national obsession.