In the latest version of CoreLogic Real estate impulseHead of research, Eliza Owen, unveiled the impact of overseas arrivals on housing demand in Australia.
The latest overseas arrivals data from the Australian Bureau of Statistics (ABS) revealed that the total number of arrivals to Australia had started to increase as early as the December quarter, Ms Owen reported.
Short-term migrants ‘dominated’ newcomers to Australia in December 2021, with 52.5% saying they planned to stay one to six months, 34% said they planned to stay only one month and 13, 6% said they planned to stay. stay of 6 to 12 months.
“While priorities for entry into Australia in late 2021 focused on returning Australian citizens and their connections – which could see people staying with friends or relatives – there will no doubt start to be a increased demand for short-term accommodation,” Ms. Owen said.
The research manager said the short-term rental market, as well as commercial accommodation, could expect higher occupancy rates and, therefore, higher incomes.
More specifically, the hotspots for this type of market are Sydney, Melbourne and Brisbane for the capitals, and Cairns and Tasmania for the regional localities. Also included are downtown neighborhoods near universities that host international students.
The “mandate cycle”
Most new migrants to Australia, according to Ms Owen, go through a “tenure cycle”, which starts with renting and shared accommodation and then moving on to owning.
The report identified these determinants of where migrants decide to settle: job opportunities, housing affordability, visa requirements, location of family or friends, and presence of a community from their country of origin.
In addition, Ms Owen cited ABS data indicating that each year more than 45% of international migrants settle in the same 10 geographic locations in Australia, which are split between Melbourne and Sydney.
Here are the top 10 regions where migrants are most likely to flock:
- melbourne – interior
- Melbourne – south east
- Melbourne – west
- Sydney – South West Interior
- Sydney Parramatta
- Sydney – city and south central
- Melbourne – central east
- Melbourne – North East
- Sydney – western interior
- Sydney – eastern suburbs
With the exception from Melbourne and South Central Sydney, these locations have already started to show price recovery.
In all of these locations, Ms Owen reported slower growth compared to national rent growth, “which was 11.0% between March 2020 and January 2022”.
“However, the trough in rental values began long before international border restrictions were lifted, with many of these markets seeing advertised rental stock below pre-pandemic levels,” she said.
Ms Owen attributed the trend to ‘relatively affordable rentals’ which may have attracted domestic demand, while some investors may have been put off by poor rental conditions, pushing them to sell their property or divert their investment to new developments. other assets.