Rental Demand Driven by Migrants
Australia’s population is growing, primarily from Net Overseas Migration (NOM). But how does this look relative to Australia’s past and what are the repercussions to the rental market? How will this added rental demand affect prices?
The forecast figures released in the latest Federal Budget reveal that they expect NOM to not only reach its highest total ever of 400,000 people in 2023, but more importantly it will be the highest migration as a percentage (1.5%) of the total population since 1949 & 1950 (1.9%), during the post-war period. This is unknown territory for rental demand.
Growth is great. It contributes to Australia’s prosperity – but not if we cannot house this growth.
The last time we saw a similar relative spike in NOM was 2008/9. This corresponded with an 8% increase in rents (as calculated in the CPI). Australia’s CPI rent growth is currently at 4.9% (5.9% excl. public housing) against a longer term average of 0.9% in the 10 years to Mar 2020, and growing steadily.
Compounding this, we are expecting below average new housing supply in the coming years at the exact same time Australia is forecasting the highest net migration in over 70 years.