Why huge immigration numbers will have ‘brutal’ impact on Sydney rental market

A migration explosion is set to heap even more pressure on a rental market already in crisis in Sydney. This is when one million migrants will be arriving and where they are expected to settle.

Sydney’s rental crunch will turn into a full-blown “crisis”, while western Sydney leaders have declared the region is “shut” as Australia faces an influx of nearly one million migrants over the next two years.

The Federal Government’s prediction of an extra 650,000 migrants arriving on top of the 250,000 already forecast comes as monthly NSW dwelling approvals nosedived from December to January this year by 49 per cent to 2599. Approvals also dropped annually, with 51,965 for 2022 - 10,000 fewer than 2021.

Economist Warren Hogan said the drop in housing approvals combined with the influx of 900,000 new residents into the country over the next 18 months would have a “brutal” impact on Sydney’s and Melbourne’s rental markets.

“If it is not in a crisis yet, this surge of migration will absolutely push the rental market in Sydney and Melbourne into a crisis,” he said.

“We know that about one-third of Australians rent, and we can assume that a much bigger proportion of new migrants will be renting as well.

“Rent rises are coming, and they are going to be brutal – I have no doubt we will see an increase in homelessness and more people moving in with friends and family to cope with this.

“I don‘t see anything in the immediate future that is going to change that. Approvals have been going down, not up.”

Western Sydney traditionally takes more migrants than any other region in the country, with 7.1 per cent of its population growth between 2016 and 2021 coming from overseas migration, higher than the national rate of 5.4 per cent.

Fairfield Mayor Frank Carbone – whose council area already has an occupancy rate of 3.2 people per home, compared to the state average of 2.6 – said “western Sydney is shut” and implored the government not to dump hundreds of thousands of new residents there.

“Western Sydney cannot be used as the place for the government to dump 650,000 new residents just so they fix their bottom line,” he said.

“We need hospitals, roads, housing and at a time when cost of living is out of control, this does not help people with their budgets or quality of living.

“We need to say western Sydney is shut – we have a very low availability of housing and this will only foster more inflation with higher prices and it’ll be people out here in western Sydney that will pay the price for this huge increase.”

Federal MP Dai Le echoed that new homes, schools and transport had to be built into her region before new residents.

Fairfield Mayor Frank Carbone says his community is already suffering so “Western Sydney is shut”. Picture: Richard Dobson

“My electorate of Fowler has been a welcoming resettlement city for decades. However, I have seen the social and community impact that comes with lack of housing and public infrastructure to support new settlements,” she said.

Australian Bureau of Statistics figures show net overseas migration hit 304,000 in the year to September, while Treasurer Jim Chalmers expects 350,000 migrants this financial year, compared to around 230,000 annually pre-Covid.

Shadow Minister for Immigration and Citizenship Dan Tehan said the influx came as Australians were being hit by soaring rents and record low rental vacancies, with Labor adding “fuel to the fire with record arrivals”.

“Labor are bringing record numbers of people into the country with no plan for where they will live,” he said.

Yolanda Seach has seen the population around her Rouse Hill community boom while SYdney’s east stands still. Picture: Jonathan Ng

“Australians understand the economic benefits of immigration but they want it done with a plan that addresses issues like housing, congestion and quality of life.

“Labor need a plan to manage their Big Australia. Without a plan, it’s not fair on Australians and it’s not fair on the people coming to Australia who have nowhere to live.”

In its campaign before winning last week’s state election, NSW Labor maintained it would push development around train lines, with new premier Chris Minns saying it wasn’t fair that “western Sydney has to take more than its share of population growth”.

Federal Housing Minister Julie Collins said “The Albanese Government has an ambitious housing agenda to boost supply in Sydney, and right across Australia”.

She said the Commonwealth was working with the state to build “one million new well-located homes over five years from 2024” as part of the National Housing Accord.

“Our housing agenda is focused on boosting supply, helping ease pressure on the housing and rental markets.”

No infrastructure for influx

For residents who have called the outer suburbs of Sydney home for decades, the latest predicted influx of migrants is likely to put more pressure onto already crammed roads and stretched health and education services.

Barry and Yolanda Seach, who have lived in Rouse Hill since 2002, said the area was ready for more houses, but public transport and roads remained an issue.

“We need to get more houses, we can’t have everybody cramped into high rises,” Mrs Seach said, but added development in the area had already outstripped infrastructure.

Terry and Wendy Fitzgerald say new homes could be built in their area of Sydney but the infrastructure isn’t there to support a growing population. Picture: Jonathan Ng

“They built Box Hill, no transport, a shopping centre centre years too late. What we need is development, we have been promised so often and we get nothing.“

Terry and Wendy Fitzgerald have lived in neighbouring Grantham Farm for 33 years and have seen it grown enormously.

“The population has exploded and the growth has been huge,” Mr Fitzgerald said.

“The government needs to think ahead because the population is growing quicker than the facilities needed.

“It’s always changing.”

Originally published as Why huge immigration numbers will have ‘brutal’ impact on Sydney rental market