The vast majority of foreigners are moving to a cluster of suburbs in Sydney and Melbourne as immigration hits record highs and apartment rents soar.
In the year to March, a record 454,400 people moved to Australia on a net basis, meaning arrivals less departures.
Migrants accounted for 81 percent of the 563,200 population increase and births. 1,543 new people live in Australia every day.
Sydney’s inner southwest, which includes Bankstown and Lakemba, received the most migrants alongside Parramatta, a CoreLogic analysis of 2016 and 2021 census data found.
The Bankstown statistical area, which stretches from Bass Hill to Picnic Point, has seen its population grow by 8.6 per cent to 186,245 in five years.
In the larger Parramatta area, which includes Carlingford and Greystanes, the population grew by 10 per cent to 493,515.
The proportion of new migrants is also higher in Melbourne’s southeast, which includes Dandenong and Pakenham as well as the inner-city areas of Brunswick and Docklands.
The data comes as apartment rents in capital cities rose 14.9 percent in the year to August, but the pain was even worse in May when rental costs rose at a record annual pace of 16.5 percent.
A CoreLogic analysis of 2016 and 2021 census data showed Sydney’s inner southwest, which includes Bankstown and Lakemba, along with Parramatta, received the most migrants, based on Australian Bureau of Statistics mapping areas
There were also higher proportions of new migrants in Melbourne’s southeast, which includes Dandenong and Pakenham, and the inner city area, which includes the city center and Brunswick and Docklands
Where do most immigrants go?
Australia’s permanent and long-term overseas arrivals have doubled in a year, thanks to more international students and skilled migrants since Australia’s borders reopened in December 2021.
This is based on 681,000 arrivals before departures.
Kaytlin Ezzy, an economist at CoreLogic, said existing tenants were feeling the pressure as immigration increased.
“The majority of recent long-term migrants rent beforehand.” “Buy,” she said.
“The impact of this additional demand is already being seen in the rental market, with apartment rents in capital cities recording a new record high annual growth rate.”
Ms Ezzy said unit rents would likely continue to rise sharply as more migrants arrive from overseas.
“While deteriorating renter affordability has caused the pace of rental growth to moderate in recent months, unit rents are likely to remain elevated for some time, particularly as net inward migration is expected to remain high through 2023 and 2024 will,” she said.
CoreLogic estimates that housing units accounted for 25.9 percent of the national housing stock, but in Australia’s capital cities this rose to 30.4 percent, up from 22.9 percent in 2010.
Ms Izzy said Australia would increasingly need more housing to accommodate a growing population.
“The medium to high density housing sector is increasingly becoming an important tool in providing additional housing stock for Australia’s growing population, particularly as households continue to congregate in metropolitan areas,” she said.
Potential interest rate cuts in 2024 could also lead to a rise in house prices – something that was not the case in 2021, when the Reserve Bank’s record low interest rates of 0.1 per cent boosted the value of houses but not residential units.
The vast majority of foreigners are moving to a cluster of suburbs in Sydney (pictured, Lakemba in the city’s inner southwest) and Melbourne as immigration hits record highs and rents soar
READ MORE: Suburbs with Chinese buyers
Chinese interest in Australian property is now so high that potential buyers are having to make appointments to view properties in large groups, an agent has revealed.
Peter Li, managing director of property agency Plus Agency in Sydney and Shanghai, said he was now organizing seminars for up to 20 buyers at a time – with drinks and snacks
“Currently, a large pipeline of units under construction, high interest rates and poor consumer sentiment could dampen unit demand and price growth,” Ms Izzy said.
“But once the pipeline is completed, Australia faces a relatively low number of approved projects, which could create a temporary vacuum in the supply of new units.”
“With the cash rate potentially set to fall in 2024, greater purchasing demand at that time could result in a larger price boom in the unit market.”
The median unit price in Sydney is $822,145, significantly higher than Melbourne’s $603,642.
But parts of Sydney’s inner southwest are more affordable, with Lakemba having a median house price of $424,555, which is significantly cheaper than Hornsby’s price of $686,346.
Australia’s national vacancy rate was just 1.2 percent in August, according to data from SQM Research.
The average weekly apartment rent in Sydney rose 20.4 percent in a year to $666 a week as of September 12, while the corresponding cost in Melbourne rose 17 percent to $527.
New South Wales Premier Chris Minns has proposed building more residential towers to accommodate the growing population.
“This won’t please everyone, but to solve the housing crisis we need to build up, not just out – and that’s exactly what we’re doing,” he tweeted in August.
The new residential towers are being built in Sydney’s western suburbs, but not in the affluent eastern suburbs near the city.
Nicky Williamson asked whether wealthy postcodes across Sydney Harbor would build more residential towers.
“Vaucluse and Mosman will want to do their bit too, right?”