Discussion around Australia’s migration strategy is gaining momentum, with many pointing to its influence on the housing market. Amidst challenges like high interest rates, low consumer sentiment, and strained affordability, property values and rents are on the rise, and vacancy rates are dropping.
Understanding the nuances of migration’s impact on the real estate sector is crucial for making informed decisions related to buying an investment property or selling your current home. Here, we delve into five key insights that shed light on the relationship between migration and the housing market.
As you enter your real estate journey, it’s essential to keep these considerations in mind, and having a seasoned conveyancer by your side can make all the difference.
- Short-Term Rental Focus for New Migrants
The immediate impact of fluctuations in overseas migration is felt in the rental market rather than property purchases. Recent data from the Australian Bureau of Statistics (ABS) indicates that a significant portion of migrants, especially those in their initial years, tend to opt for rental arrangements. This trend shifts towards home ownership for migrants who have been in the country for a more extended period.
- Impact of the Travel Bans on Migration Surges
Australia’s response to the COVID-19 pandemic involved closing its borders, leading to a temporary restriction on migration. However, the subsequent reopening saw an unprecedented surge in overseas migration, reaching levels far above pre-pandemic averages (454,000 added to the population in the past 12 months). This saw demand for around 182,000 additional dwellings, in a year when around 175,000 dwellings were completed. It’s crucial to recognise that this surge is, in part, a response to delayed decisions to migrate and may not be indicative of a long-term trend.
- Impact of Migration Bans on Rental Markets
Temporary migration caps, as witnessed during the pandemic, can create short-term relief in housing demand. However, the reopening of borders resulted in a demand shock, particularly affecting rental markets. This shock, combined with constraints on housing supply due to various factors, led to a notable increase in rents, especially in regions historically associated with high overseas migration.
- Diverse Factors Driving Housing Costs
While migration plays a role in housing demand, it’s not the sole factor driving up costs. Changes in household size, influenced by factors like the pandemic, government stimulus, and low interest rates, have also impacted housing demand. Additionally, long-term trends such as an aging population and declining marriage rates contribute to the evolving landscape of housing requirements.
- Trade-Offs of Migration Policies
While adjusting migration policies could aid in improved planning for infrastructure and housing, it comes with economic trade-offs. Skilled migration, in particular, has the potential to address shortages in critical sectors like construction.
Having the support of a seasoned conveyancer can be invaluable to navigate this tricky market of buying or selling. With overseas migration to Australia increasing demand-side pressures on housing costs, your conveyancer can expertly guide you through intricate processes. They ensure that all necessary paperwork is completed seamlessly. If you have any questions or concerns about the impact of migration on the real estate market or settlement processes, feel free to reach out to your local bytherules Conveyancing Franchise owner.
