Migration to place increase pressure on Australian rental markets

Chinese interest in Australian property has surged past pre-Covid levels, with migration expected to place additional pressure on Australia’s already stretched housing markets.

Interest form Chinese buyers has surged. Picture: Jason Edwards

Chinese interest in Australian property has surged past pre-Covid levels, with migration expected to place additional pressure on Australia’s already stretched housing markets.

A new report from researcher PropTrack has revealed search on Realestate.com.au from overseas for rental properties over the past quarter was up by more than a third on pre-pandemic levels, and up 29 per cent to purchase.

China’s mandate for students enrolled in foreign universities to return to campuses saw rental searches from the country reach their highest levels in over three years through February, trending up 55 per cent over the past year to nudge out the UK (54 per cent).

Buy searches from China were also up year-on-year by 40 per cent, with interest from India also surging by 37 per cent.

Net migration is expected to hit 350,000 this financial year, underpinned by a flood of returning foreign students and tourists. Rental search increases coincide with the sharp increase in student arrivals, up 190 per cent to 142,000 in February compared to the year prior, according to the Australian Bureau of Statistics.

PropTrack executive director of research Cameron Kusher said rental markets are already showing signs of stress from the additional demand, which is only expected to worsen.

“The overwhelming majority of new arrivals to Australia don't own a property and won’t own a property for some time, with some eventually deciding not to stay,” Mr Kusher said.

“What they will need is accommodation and this will largely be rental accommodation. The added demand creates more competition for rental stock and at the moment, with insufficient rental supply, it will afford landlords the ability to increase rents.”

The surge in interest from China follows the government’s abandonment of its Covid-zero policy in December. Although the local economy has begun to grow, sentiment towards the housing industry has remained weak, with dozens of heavily indebted building companies defaulting over the past two years.

PropTrack executive director of research Cameron Kusher.

Foreign Investment Review Board data showed China was the largest source of investment in Australian residential property in the December quarter, however overall spend was down significantly. A recent survey from equities house CLSA of 1600 middle-class Chinese suggested the renewed interest will reflect a “steady stream rather than torrent” of purchases in the coming months. The findings also did not support another wave of Chinese investment in Australia similar to the 2014-17 boom.

Mr Kusher agreed, saying it is unlikely to rebound to the magnitude of pre-Covid.

Interest from New Zealand still tops the list of international locations, with rent searches up 37.5 per cent on this time last year and buy searches up 8.8 per cent.