Migration and property – the undeniable connection The closing of Australian borders to defend against the spread of COVID-19 has predictably given rise to numerous economic challenges, including a deterioration in our country’s population growth. The Treasury forecasts for FY20/21 indicate the lowest rate of population growth since 1917. This dip is mostly contributed to low overseas migration, which will fall from approximately 154,000 people in FY19/20 to around -72,000 people in 2020–21. But what does this mean for the property sector?
Weaker rental demand The drop in overseas migration is likely to have a softening effect on the rental market. Geographically speaking, Melbourne and Sydney will experience the greatest hit. In 2019, 84 per cent of all overseas migration flowed into the capital cities – three quarters of which arrived in Sydney and Melbourne.
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Bolstering this analysis are recent statistics shared by Domain stating that the length of time that Melbourne rental properties remain advertised jumped a staggering 40 per cent in November 2020 compared with the previous year. Additionally, more than a quarter (26.1 per cent) of all Melbourne houses and apartments listed for rent had their asking price reduced. Developer projects – existing and future The developer market plays an integral part in the rental sector, with both existing and future projects key to meeting occupant demand. The question on everyone’s lips is how will low migration impact this prominent area within Australia’s property industry? According to the Reserve Bank of Australia (RBA), in Sydney and Melbourne, the number of apartments estimated to be completed over the next two years is equivalent to around 4 per cent of the non-detached dwelling stock. In Melbourne, over half of apartments in the pipeline are located in the city and inner suburbs.
