Foreigners are overwhelmingly moving to a cluster of suburbs in Sydney and Melbourne as immigration surges to a record high and apartment rents skyrocket.
A record 454,400 people moved to Australia in the year to March, on a net basis accounting for arrivals minus departures.
That conservatively means 181,723 new homes are needed for the foreign influx, with households on average having 2.5 people.
Migrants accounted for 81 per cent of the 563,200 population increase, taking in births, with Australia housing 1,543 new people a day.
Sydney’s inner south-west, covering Bankstown and Lakemba, took in the most migrants, along with Parramatta, a CoreLogic analysis of Census data from 2016 and 2021 revealed.
The Bankstown statistical area, stretching from Bass Hill to Picnic Point, saw its population in five years grow by 8.6 per cent to 186,245.
In the larger Parramatta area, covering Carlingford and Greystanes, the population grew by 10 per cent to 493,515.
Melbourne’s south-east, covering Dandenong and Pakenham, and the inner-city areas of Brunswick and Docklands, are also housing a higher proportion of new migrants.
The broad south-east statistical area of Melbourne saw its population surge by 13.9 per cent in five years to 860,060.
The inner area of Melbourne had a more modest 4.3 per cent increase to 617,018 but the Census was taken when Australia was closed to immigration and many international students had returned to their home nation.
The data comes as capital city unit rents soared by 14.9 per cent in the year to August, but the pain was even worse in May when leasing costs were climbing by a record annual pace of 16.5 per cent.
A CoreLogic analysis of Census data from 2016 and 2021 showed Sydney’s inner south-west, covering Bankstown and Lakemba, took in the most migrants, along with Parramatta, based on Australian Bureau of Statistics mapping areas
Melbourne’s south-east, covering Dandenong and Pakenham, and the city’s inner area, covering the city centre along with Brunswick and Docklands, were also housing a higher proportion of new migrants
Where most immigrants are moving to?
Australia’s permanent and long-term overseas arrival numbers have doubled in a year, thanks to more international students and skilled migrants since Australia’s borders were reopened in December 2021.
That’s based on 681,000 arrivals before departures.
CoreLogic economist Kaytlin Ezzy said existing renters were feeling the squeeze as immigration climbed.
‘The majority of recent long-term migrant arrivals rent before buying,’ she said.
‘The impact of this additional demand has already been seen in the rental market, with capital city unit rents recording a new record high annual growth rate.’
Ms Ezzy said unit rents were likely to keep increasing at a steep rate, as more overseas migrants arrived.
‘While worsening rental affordability has seen the pace of unit rental growth ease in recent months, unit rents are likely to remain elevated for some time, especially with net overseas migration expected to remain high through 2023 and 2024,’ she said.
CoreLogic estimated units made up 25.9 per cent of national housing stock but this rose to 30.4 per cent in Australia’s capital cities, up from 22.9 per cent in 2010.
Ms Izzy said Australia would increasingly rely on more apartments to housing a surging population.
‘The medium to high-density sector is increasingly becoming an important tool in delivering additional housing stock for Australia’s growing population, especially as households continue to congregate in metropolitan areas,’ she said.
Possible rate cuts in 2024 could also see a lift in apartment prices – something which didn’t occur in 2021 when record-low 0.1 per cent Reserve Bank interest rates spurred house but not unit values.
Foreigners are overwhelmingly moving to a cluster of suburbs in Sydney (pictured is Lakemba in the city’s inner south west) and Melbourne as immigration surges to a record high and rents skyrocket
READ MORE: Suburbs with Chinese buyers
Chinese interest in Australian real estate is now so strong that prospective buyers have to make an appointment to be shown properties in large groups, an agent has revealed.
Peter Li, the general manager of the Sydney and Shanghai real estate agency, Plus Agency, said he now organises seminars for up to 20 buyers at a time – with drinks and snacks
‘At the moment, an elevated pipeline of units under construction, high interest rates and low consumer sentiment could temper unit demand and price growth,’ Ms Izzy said.
‘But once the pipeline is worked through, Australia faces a relatively low number of approved projects, which may create a temporary vacuum in new unit supply.
‘With the cash rate potentially easing in 2024, greater purchasing demand could fuel a stronger price boom in the unit market at this time.’
Sydney’s median unit price of $822,145 is significantly higher than Melbourne’s $603,642.
But parts of Sydney’s inner south-west are more affordable with Lakemba having a mid-point apartment price of $424,555, which is significantly cheaper than Hornsby’s $686,346 level.
Australia’s national vacancy rate stood at just 1.2 per cent in August, SQM Research data showed.
Sydney’s median weekly apartment rent soared by 20.4 per cent in a year to $666 a week as of September 12, as Melbourne’s equivalent costs climbed by 17 per cent to $527.
NSW Premier Chris Minns has suggested building more apartment towers to house the surging population.
‘Not everyone will like this, but to fix the housing crisis, we must build up, not just out – and that’s exactly what we’re doing,’ he tweeted in August.
The new apartment towers are going up in Sydney’s western suburbs but not the wealthy eastern suburbs close to the city.
Nicky Williamson asked if wealthy postcodes on other side of Sydney Harbour would be putting up more apartment towers.
‘Vaucluse and Mosman will want to pull their weight too, right?’
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