Residz Team 4 min read
It’s been a long time since Paul Hogan threw an ‘extra shrimp’ on the barbie for overseas visitors. But, Australia is back as a destination for both travellers, skilled immigrants, and overseas students. Here we look at the numbers, and what it means for Australia’s real estate market.
Australia back on the radar
Australia's population grew by 0.9 per cent in the year to March 2022, according to recent data released by the Australian Bureau of Statistics (ABS). Beidar Cho, Demography Director at the ABS, said that with the softening of international border closures, net overseas migration added an estimated 110,000 people to the population.
It shows Australia is once again becoming a popular work, study, and lifestyle destination.
Long-term and short-term visitors
47,110 long-term overseas visitors flew into Australia in August 2022, according to the ABS, just after 60,550 had arrived in July. Meanwhile more than 1,022,120 overseas visitors came for a short-term visit in July and August, about quarter of a million fewer than the Aussies taking off in the opposite direction. New Zealand was the largest source country, accounting for 22.0% of all visitor arrivals, followed by India and Singapore.
Family reunions accounted for many of the visitors. The most frequently stated main reason for journey by short-term visitors to Australia was:
Impact of new cap for skilled migrants
As well as visiting grandma and enjoying prawns on barbies, plenty of overseas visitors are here to work and study.
Perhaps attracted by the government’s recently announced new cap for 2022-23 permanent skilled migration - which sees available places rise to 195,000 from 160,000 - there has been a rise in overseas visitors coming to study here.
Some courses can lead to Permanent Residency provided students complete a minimum of two years of study in Australia (depending on the level and course).
Students coming back, and will need somewhere to live
In August, 22,440 overseas students arrived to begin or further their higher education, and almost 2000 flew in for postgraduate research. A further 8440 came for vocational studies (such as hairdressing, motor mechanics, commercial cookery). And, 5600 came for English Language Intensive Courses for Overseas Students (ELICOS).
It’s going to test an already saturated private rental market but will be welcomed by providers of student accommodation who’ve had to survive a mass exodus of students through COVID-19.
All in all, there were 1,191,830 visitor arrivals in 2021-22. This is an increase of more than 1 million on the previous year, up from 150,880, with 97.2% of movements occurring from November 2021. (ABS)
National Australia Bank says the situation of closed borders, and resultant slowdown in population growth caused by the interruption to the flow of skilled migrants and the labour supply offered by temporary visa holders is “thankfully beginning to ease”.
What does it mean for the real estate market?
How will the housing market be impacted? Writing for Smart Company, Bernard Keane suggests house prices will go up.
“What a 25% increase in migration would do — especially if coupled with a full-scale return of foreign students to higher education — is to push house prices and rents up. Coates and Reysenbach estimated a 40,000 increase would lift rents by 5%.” - Bernard Keane
For real estate vendors told to be ‘realistic about price’ in this dampened market, it’s welcome news. But, city vendors might be the main beneficiaries from a surge in housing demand.
In 2018, the Grattan Institute spelled out the usual impact of increased immigration:
“Immigrants are more likely to move to Australia’s big cities than existing residents, which increases demand for scarce urban housing. In 2011, 86% of immigrants lived in major cities, compared to 65% of the Australian-born population.” - Grattan Institute
Affordability may give regional areas the upper hand
However, lack of affordability may drive skilled immigrants to the regional areas. With the new skilled migration quotes, 34,000 places are for the regions for this year. It will put added pressure on already low regional rental vacancy rates, which has forced at least one council to consider a Room 4 a Roomie proposal.
Hundreds of thousands will live in cars and tents predicts expert
Propertyology founder and head of research Simon Pressley, quoted in the Real Commercial article ‘Housing Needs in Full Flight as Migration Rises’, says he does not believe the housing market can cope with all the additional demand.
“In less than a year from now, there will be hundreds of thousands of people living in makeshift shelters such as the back seat of a car, a friend’s garage or a tent.” - Simon Pressley.
As always in this real estate market, it seems it’s a case of watch this space.
Residz can help buyers and sellers reduce the stress:
Image: Screenshot from ‘Come and Say G’day’ ad, Wikipedia