Will overseas arrivals impact property markets?

By Noemi Pamintuan-Jara 02 March 2022 | 1 minute read

As Australia’s international borders reopened on 21 February 2022, demand for property associated with the return of overseas arrivals is expected to be “slow”, according to research. 

overseas arrivals impact property markets

In CoreLogic’s latest Property Pulse, head of research Eliza Owen unpacked how overseas arrivals would impact housing demand across Australia.

Short-term visitors

The Australian Bureau of Statistics’ (ABS) latest overseas arrival data revealed that total arrivals to Australia started to rise as early as the December quarter, reported Ms Owen.

Short-term migrants “dominated” Australia’s new arrivals in December 2021, with 52.5 per cent stating they planned to stay for one to six months, 34 per cent said they planned to remain for only one month, and 13.6 per cent said they planned to stay for six to 12 months.

While priorities for entry to Australia at the end of 2021 were focused on returning Australian citizens and their relations – which could see people staying with friends or relatives – there will no doubt start to be an increase in demand for short-term accommodation,” Ms Owen said.

The head of research said the short-term rental market, as well as commercial accommodations, could expect higher occupancy rates and, as a result, higher income.

Specifically, hot spots for this market type are Sydney, Melbourne, and Brisbane for the capital cities, and Cairns and Tasmania for regional locales. Also included are inner-city precincts near universities that cater to international students.

The ‘tenure cycle’

Most new migrants in Australia, according to Ms Owen, go through a “tenure cycle”, which begins with renting and shared housing, and later on to home ownership.

The report identified these determinants where migrants decide to settle: job opportunities, housing affordability, visa conditions, location of family or friends, and presence of a community from their country of origin.

Furthermore, Ms Owen cited ABS data reporting that each year, over 45 per cent of international migrants settle in the same 10 geographic locations in Australia, which are spread among Melbourne and Sydney.

These are the top 10 regions where migrants are most likely to flock to:

  •       Melbourne  inner
  •       Melbourne – south-east
  •       Melbourne – west
  •       Sydney – inner south-west
  •       Sydney – Parramatta
  •       Sydney – city and inner south
  •       Melbourne – inner east
  •       Melbourne – north-east
  •       Sydney – inner west
  •       Sydney – eastern suburbs

With the exception of Melbourne and Sydney’s inner south, these locations have already begun to exhibit price recovery.  

Across all these locations, Ms Owen reported slower growth compared to national rent growth, “which was 11.0 percent between March 2020 and January 2022”.

“However, the bottoming out in rental values started well before international border restrictions were lifted, with many of these markets seeing advertised rental stock below pre-pandemic levels,” she said.

Ms Owen has attributed this trend to “relatively affordable rentals” that may have attracted domestic demand, whereas some investors may have been put off by poor rental conditions, pushing them to sell their property or to divert their investment to other assets.

About the author

Noemi Pamintuan-jara

Noemi Pamintuan-jara

Noemi is a journalist for Smart Property Investment and Real Estate Business. She has extensive experience writing for business, health, and education industries. Noemi is a contributing author of an abstract published by the American Public Health Association, and Best Practices in Emergency Pedagogical Methods in Germany. She shares ownership of the copyright of an instructional video for pharmacists when communicating with deaf patients. She attended De La Salle University where she obtained a double degree in Psychology and Marketing... Read more

Will overseas arrivals impact property markets?
overseas arrivals impact property markets
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