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The shift in Australia’s international migration patterns caused by the COVID-19 pandemic has been a big factor in altering the direction of Australia’s property market, according to a new market report.
QBE’s Australian Housing Outlook for 2021 2024 takes a deep dive into how migration patterns continue to ripple across the market, subverting the expected long-term trends.
One of the most visible impacts of the COVID-19 pandemic, the report notes, has been the abrupt halt to migration with Australia’s border’s effectively closed. Net inflows have reportedly fallen from around 250,000 a year to -72,000 in the first half of 2020-21. Initially, economists were concerned about the impact of such a sharp fall in population growth on the property market. Those downsides, however, did not materialise.
While several factors – including low interest rates, government support schemes, savings accumulated during lockdowns and a desire for more space – have been the most obvious drivers of a hot housing market, QBE notes a shift in migration both internationally and domestically has ultimately been a positive contributor towards this growth too.
The pandemic may have altered the pattern of overseas long-term arrivals and departures with the closed border impairing the arrival of tourists and foreign students, but in the housing market, the loss of these groups has been offset by a rebound in numbers of returning citizens and the arrival of new permanent residents. In addition, the outflow of citizens and permanent residents has drastically fallen, so that overall, the net flow from this group has increased, according to the report.
QBE’s analysis shows that the shift of more Australians staying in-country and many overseas Australians choosing to come home has had a significant impact.
“Returning citizens and new permanent residents moving to Australia have added a new source of demand to the market, while the drop in outflows means that some properties that would have been sold (as the owners move overseas) have not entered the market,” the report states. “Overall, this shift in overseas migration has added to the upward pressure on prices.”
Added to that has been the changed course of domestic migration patterns, with onetime city-dwellers capitalising on remote work availability and embarking on sea changes or tree changes in regional areas.
But QBE doesn’t advise anyone banking on current patterns turning into continuing trends.
“It is expected these shifts will diminish over time and broadly return to the long-term trends, though the near-term landscape is evolving, given the unique and complex nature of COVID-19.”