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Migration & Housing Demand

Feb 20, 2024

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Record inflows in migration. A decade-long surge in net overseas migration is driving a massive uplift in population growth in Australia. While the record pace of immigration post-pandemic might slow for policy reasons, the big impacts on housing demand are here to stay.

Demand exceeds supply. The increase in housing demand has occurred with diminished supply gains. Supply has been slowed by elevated mortgage rates, higher construction costs and wet weather. Australia is set for marked housing undersupply for some years ahead.

Acting your age. The evolving age profile in Australia is clearly shifting housing requirements as well, adding demand broadly to all types of living sectors, but also across specific age groups, including senior retirees, first home buyers, upgraders and university students.

A home among the gum trees. New arrivals from different parts of the world bring with them very different housing preferences. Indeed, migration patterns are likely to add demand concurrently for higher-density apartments, house and land packages and student housing.

Putting a roof over everyone. With this firm pace of housing demand, there are more urgent calls to lift housing supply, via a policy push for speedier and friendlier development approvals. However, this catch up in supply will likely take several years to unfold nationwide.

Firm performance drivers ahead. Persistent housing undersupply is pushing residential vacancies to ultra low levels, unleashing a sizeable surge in rents. Growing residential rents are offering a strong hedge against inflation, especially compared to lagging commercial rents.