Megan Lieu, Economic Analyst at REA Group
Updated 23 Sep 2022,
With Covid border closures now a distant memory, Australia has just seen its largest annual population growth since June 2020 – and housing markets aren’t prepared for the influx.
With the rental market already struggling from supply constraints and heightened demand, this influx of people will add to the pressures felt in some of our largest cities.
The recent national, state and territory population release from the Australian Bureau of Statistics shows the country’s population grew by 0.9% annually to March 2022.
A large contributor to this was the increase in net overseas migration by 204,000 people in the year ending March 2022.
For the past two years, New South Wales and Victoria saw almost no population growth. With Melbourne and Sydney being usual hubs for international students, border closures had a considerable impact.
This was exacerbated by increased interstate migration into Queensland by residents from our two largest states, as they sought a lifestyle change and more affordable housing.
However, with overseas migration now returning, rental demand for homes in our largest capital cities has risen again – and this is reflected in weekly rent prices and the number of potential renters per listing.
On average, there has been a 32% rise in the number of highly engaged people looking at Melbourne rentals since August last year.
With companies encouraging a return to the office and international students resuming their studies in Australia, there has been a surge in competition for inner-city rental apartments and houses.
Weekly rental prices have increased by 9% across capital city markets over the past year as a result of high demand and low supply.
Rents in Sydney, Melbourne, and Brisbane have risen by 10%, 12% and 8% respectively.
As overseas migration continues to increase, demand for rentals will remain elevated for some time.
We expect to see little improvement in the supply of rentals amid already tight rental markets. Those factors will put further pressure on the cost of renting over the short- to mid-term.