How will the return of international arrivals affect the property market?
The reopening of international borders this week and the return of overseas migration are expected to benefit a number of key property markets across the country.
CoreLogic’s head of residential research Australia, Eliza Owen, said that inner Melbourne was set to benefit the most from the return in overseas migration, after recording one of the highest levels of net overseas migration in the years leading up to the pandemic.
She suggested that the housing preferences of skill migrants could also be subject to change over time which may potentially lead to greater demand across a number of other regions.
“The rise of popularity of regional Australia and South East Queensland domestically may eventually attract greater employment opportunities, business entries, and overseas migrants to these same locations,” Ms Owen said.
Around 12.5 per cent of skilled visas granted in the second half of last year were for arrivals into Queensland, up from an average of 11.5 per cent in the three years to June 2019.
However, Ms Owen pointed out that 43.5 per cent of skilled visas were granted for arrivals into NSW and the overall number of skilled visas granted had declined.
CoreLogic said that a slow return of overseas migration was to be expected moving forward along with a subsequently slow demand for housing.
“However, many of the most impacted markets have already seen a recovery trend since early last year, thanks to relatively affordable rents, a decline in total listings, and more recently, temporary migrants such as university students and visitors,” said Ms Owen.
The beginning of the university year had seen a relatively high proportion of student visa entrants in recent months according to Ms Owen.
“Rental demand from this cohort of migrants is likely to be most concentrated across the inner city precincts of the capital cities and within close proximity to academic hubs,” she said.
Ms Owen also explained that most overseas immigrants experienced a “tenure cycle” which began with renting and shared accommodation before rates of homeownership eventually became comparable to those who are born in Australia.
As a result, the most popular regions for recent arrivals in Sydney and Melbourne suffered sharp declines in rental values after borders were closed in 2020.
“It is also noteworthy that a decline in migration through the COVID period may eventually flow through to a lower demand in purchases where overseas migrants would otherwise be further along in their tenure cycle,” added Ms Owen.
