As you know, we love talking about the Aussie property market and keeping you updated on the latest shifts. Lately, we’ve seen interest rates climb and housing affordability take a hit. Let’s face it – the general mood has become a little low. So, we thought we’d share a bit about what’s going on so you can make sense of chaos – and come out on top!
National home values have been on a rollercoaster (shooting up by 7.2% in the year so far!), and rent prices have followed suit (with a 6.0% increase). Unsurprisingly, the buzz around migration is getting louder as housing affordability (and accessibility) becomes a bit of a sore point for locals. But there’s more to the story than first meets the eye.
Let’s break it down with five insights into migration’s role in today’s property market (inspired by some recent data from Core Logic):
#1. New Migrants are Renting, Not Buying:
Most migrants start out life in Australia as renters, not homeowners. The stats show that 60.8% of migrants who arrived in the five years leading to 2021 were renting. Now, that makes sense, right? You’ve just landed, and you’re figuring out where you want to set up camp. The longer people stay, the more likely they are to put down roots and grab a slice of the property pie!
#2. COVID Had a Say in Migration Rates:
When COVID came knocking, we shut our borders tight – for years! It wasn’t until July 2022 that we flung those doors open again, welcoming people back onto Aussie soil. By March 2023, our annual population growth hit 2.17%, the highest since 2008. Net overseas migration (that’s arrivals minus departures) went bonkers, reaching a record-breaking 454,000 in the past 12 months. Without the COVID hiccup, we’d probably be closer to our usual migration averages.
#3. COVID Made Renting a Rollercoaster:
The COVID ban on migration created a bit of chaos in the rental market. Sure, it put a temporary lid on housing demand, but when we opened up again, it was like a stampede. Rents shot up, especially in places where migration has historically been high. Melbourne’s South East and Sydney’s Inner South West saw rents jump by a whopping 18%. But here’s the kicker – in the long run, rent growth isn’t tied that strongly to migration. In fact, some areas with plenty of migration have had slower rent growth over the past five years.
#4. More People, More Demand:
COVID didn’t just mess with our borders; it also got people rethinking their living arrangements. With fewer people per household during the early pandemic days, we saw demand for houses increase by around 120,000 households. That was while the borders were still shut. And don’t forget, low interest rates and government stimulus cash made it easier for people to splash out on bigger homes. Other factors like our aging population and fewer folks tying the knot also played a part in smaller households.
#5. Cutting Migration Comes with Trade-offs:
Now, here’s the million-dollar question – should we slam the brakes on migration? Well, it’s a bit of a mixed bag. On the one hand, capping migration could help us plan better for things like housing and infrastructure. But, on the flip side, it could throw a spanner in the economic works. Skilled migrants, for instance, can help tackle shortages in sectors like construction. The UK’s done it, and even WA’s chipped in with a grant to get skilled migrants building more homes.
So, there you have it. Migration’s shaking up our property scene, but it’s not the only player in the game. And hey, let’s not forget there are other tricks up our sleeves to balance the property scales, like getting more out of the homes we already have.
If you have any questions regarding what this means for you, book a no-obligation call with our friendly team today. We know the market (and the industry) inside out and can guide you forward!
Disclaimer: The tips and insights provided in this article are general in nature and should not be considered as professional financial advice. We recommend consulting a licensed mortgage broker or financial advisor to discuss your specific circumstances and obtain personalised advice.