Our migration figures have come under close scrutiny since Australia emerged from the COVID pandemic, with a return of overseas migration being blamed as one of the reasons for our extremely tight rental markets.

The ongoing undersupply in housing and rental properties has helped to push up home prices and rentals, adding to the cost-of-living burden facing many Australians.

However, with no quick fix to supply issues, both the federal government and the opposition turned their focus to the demand side, each proposing a tightening of migration to reduce housing pressure.

Well, the latest migration figures have just been released by the Australian Bureau of Statistics, and even though overseas migration has reduced, is it going to be enough to fix our housing problems?

That’s one of the questions  I ask Dr Andrew Wilson in today’s Property Insiders chat.

Migration surge eases

In the year ending 30 June 2024, overseas migration contributed a net gain of 446,000 people to Australia's population.

This was a decrease from the record 536,000 people the previous year according to the ABS .

• Net overseas migration was 446,000 in 2023-24, down from 536,000 a year earlier
• Migrant arrivals decreased 10% to 667,000 from 739,000 arrivals a year earlier
• Largest group of migrant arrivals was temporary students with 207,000 people
• Migrant departures increased 8% to 221,000 from 204,000 departures a year earlier.

2023-24 represents the first annual decrease in net overseas migration since the border restrictions were lifted. This lower level was led by a decrease in migrant arrivals, largely temporary visa holders, while departures increased during the same period.

Watch this week’s Property Insider chat as Dr Andrew Wilson discusses overseas as well as interstate migration.

As you can see from the following chart, overseas migration mainly went to New South Wales and Victoria

On the other hand the bulk of interstate migration went to Queensland while New South Wales lost 30,000 people to interstate migration.

Despite the fall in immigration numbers, we are not building enough dwellings to supply all the new immigrants, and there are definitely not enough rental properties available considering that most new immigrants rent for the first couple of years.

The surge in population growth to a record 660,000 last year, driven by record immigration levels meant that around an extra 250,000 new homes needed to be built last year alone.

But instead, completions have been running around 170,000 as the home building industry struggles to keep up with rising costs and material and labour shortages and as approvals to build new homes fell.

In fact it has been "conservatively" estimated that we have an accumulated housing shortage of around 200,000 dwelling currently, and it is unlikely our housing shortage will be resolved in the next decade, maybe we will have continue continuing pressure for rising house prices and rents.

International Students Aren’t the Culprit in Australia’s Housing Crisis

In recent years, as housing affordability has worsened across Australia, international students have been thrust into the spotlight as a scapegoat.

• Also read:Finally Falling: Will Reduced Migration Rates Help Solve the Housing Shortage? | Property Insiders
• Also read:Adelaide housing market update | December 2024
• Also read:Perth housing market update | December 2024
• Also read:Brisbane housing market update | December 2024
• Also read:Sydney housing market update | December 2024

It’s an argument that’s tempting in its simplicity: more students mean more demand, which pushes up rents.

But that's not really the case as Dr. Andrew Wilson and I discuss in this week's Property Insider chat.

According to the Student Accommodation Council (SAC), international students account for only 6% of the rental market.

Source: PropTrack

Their impact on housing is heavily concentrated in inner-city areas, where most student accommodation is located.

A staggering 73% of local government areas have an international student population of less than 1%.

In other words, for the vast majority of Australian communities, international students aren’t even on the radar when it comes to housing pressures.

And here’s the kicker: during the height of the pandemic, when international student arrivals plummeted by 13%, rents didn’t drop.

In fact, they skyrocketed by 30% from December 2019 to December 2023.

This alone dismantles the argument that student numbers are driving rental hikes.

The cost of construction is rising again

 

Watch this week’s Property Insider chat as Dr Andrew Wilson explains how the cost of construction of new drawings has started to creep up again, and this is not surprising considering the recent surge in building approvals.

Of course this is going to make the cost of new drawings even more expensive, adding to inflationary pressures and the challenge of making new developments financially feasible.

Steady finish to the 2024 Auction Season

Watch this week’s Property Insider chat as Dr Andrew Wilson breaks down the results of the auctions held over the last week.

Not surprisingly auction numbers were much lower than normal as we're heading towards Christmas.

Melbourne recorded a clearance rate of 67.6% over the past week - Melbourne's auction clearance rates have remained consistent throughout the last few months.

Sydney recorded a clearance rate of 60.5% over the week, which was lower than the 61.7% recorded over the previous week.

Clearance rates have continued to reflect generally solid results for most sellers over the spring selling season although activity has predictably waned as the season concluded.