House prices will recover once interest rates stop rising and some new immigrants opt to buy houses, as the influx fuels a rental crisis, experts say.
Net annual immigration from Australia in the year to September 2022 was 303,700 people, the highest in 15 years, bringing the overall population above 26.1 million.
This was the largest increase abroad since late 2008 and includes skilled immigrants, family reunions and international students.
The number of immigrants was also significantly higher than the October budget forecast of 180,000 for 2022-23 and the level of 235,000 projected for 2024-25.
Tim Lawless, head of research at property data group CoreLogic, said more immigration is likely to help restore home values once the Reserve Bank of Australia stops raising interest rates.
Overall population growth of 1.6 percent returned to pre-pandemic levels, new data from the Australian Bureau of Statistics showed.
By comparison, New Zealand’s population grew just 0.2 percent over the same time period, while the US population rose 0.4 percent last year, with one expert blaming the rise in international students due to Australia’s rental crisis.
House prices are expected to recover once interest rates stop rising as Australia posts some of the world’s strongest population growth and immigration hits record levels, experts say (pictured, an auction in the Sydney suburb of Strathfield)
Lawless explained that despite the problems the influx of immigrants could be causing, it may also help house prices recover as new immigrants look to buy rather than enter the difficult rental market.
“The increase in long-term and permanent migrants could be another factor supporting stronger market conditions,” he said.
“While most of the housing demand from overseas migration is likely to flow into the rental market, with vacancy rates this low, we may see a higher than normal share of long-term immigrants.” or permanents who choose to buy instead of rent”.
Westpac now expects the Reserve Bank of Australia to halt rate hikes in April.
The bank’s chief economist, Bill Evans, is forecasting a 3.85 percent cash rate in May, instead of a 4.1 percent rate, as financial market concerns worry the RBA.
“The main change since the March RBA board meeting has been adverse developments in global markets,” he said.
Bob Birrell, president of the Australian Institute of Research and Population, said that increased numbers of international students had caused the increase in the level of net annual immigration from Australia and was the main cause of a rent crisis in Sydney and Melbourne, in particular. .
Australia’s annual net immigration pace in September 2022 stood at 303,700, the highest in 15 years, bringing the overall population above 26.1 million.
“A little over 50 per cent of that migration in Australia ends up in Sydney and Melbourne, and they are going to need rental accommodation,” he told Daily Mail Australia.
“That is a crucial factor in the rental crisis right now.
“The Labor government is stuck here: it is raising concerns about the well-being of young Australians looking for rental accommodation, but at the same time it is adding a huge burden to the demand for that scarce accommodation.”
The Sydney suburb of Randwick, near the University of New South Wales, has an ultra-low rental vacancy rate of just 0.8 percent, SQM Research data showed.
Commonwealth Bank Senior Economist Belinda Allen said Australia’s population growth returned to pre-pandemic levels, with net immigration rising by 106,000 during July, August and September last year, setting a new quarterly record.
“Given the flow of long-term and permanent net arrivals abroad, we are not surprised to see a record rise in net migration abroad,” he said.
Bob Birrell, president of the Australian Institute for Population and Research, said that increased numbers of international students led to an increase in the level of net annual immigration from Australia and was the main cause of a rent crisis in Sydney (pictured on Randwick’s tail) and Melbourne in particular.
Immigration was the key source of Australia’s population growth, as the birth rate fell and covid deaths rose.
The net outward migration figure of 303,700 was based on 536,900 foreign permanent migration arrivals minus 233,200 permanent departures.
Australia’s strong population growth rate of 1.6 percent came despite the fact that the natural increase, or births minus deaths, was 18.1 percent weaker than the previous year.
The Sydney property market is already benefiting from increased immigration with median house prices in February rising 0.3 per cent, despite the Reserve Bank during that month raising the cash rate for a ninth month consecutive.
But prices are still 14.7 percent lower compared to a year earlier, when the cash rate was still at a record low of 0.1 percent, with median home value still expensive at 1,217. $308.
Australia’s immigration growth rate of 1.6 percent dwarfed New Zealand’s 0.2 percent rate and the US level of 0.4 percent (pictured, a Sydney train crowded)
The RBA raised the cash rate again for the 10th time in March, taking it to an 11-year high of 3.6 percent.
Despite that, Sydney property values in the first half of March were 0.5 percent higher, while Melbourne and Perth values rose 0.2 percent.
Queensland had Australia’s strongest population growth rate of 2.2 percent, with 114,400 new residents moving there, including many from other states seeking a better climate.
By comparison, 108,700 people moved to New South Wales, which had a growth rate of 1.3 per cent, as high foreign immigration coincided with existing residents moving to other states.
Victoria attracted a similar number, or 108,400 new residents, but had a growth rate of more than 1.7 percent.
Western Australia also had an above-average rate of growth, with the population increasing by 1.8 percent as 50,400 people moved there.