Property News, Insights & Education

    Why Migration is Fuelling Greater House Price Growth and Housing Demand

    Immigration has always been at the heart of our nation’s growth. 

     

    We need it, and our economy has diversified and prospered thanks to the people who were born elsewhere but chose to call Australia home. 

     

    And why wouldn’t you?

     

    A prosperous economy, education is world-class, and there are plenty of jobs, fresh air, sunshine and beaches. 

     

    On the other hand, the more immigrants we have, the more housing and infrastructure we need. 

     

    And our local builders and tradies are snowed under trying to keep up as it is, without the added burden of new arrivals who need houses too. 

     

    So, how significant is immigration really?

     

    There have been lots of reports on immigration numbers, so let’s get clear on exactly what’s going on, straight from the ABS. 

     

    To say it’s sizeable would be an understatement. 

     

    The total population growth rate in the last 12 months was 563,200 people. That’s a growth of 2.2%, which is extraordinarily high. 

     

    Typically, it’s in the range of 1.4% to 1.6%.

     

    And net overseas migration (that’s how many people came here minus how many left) accounts for the lion’s share. 

     

    454,000, to be precise. 

     

    The rest, 108,800 was a natural increase, in other words – births minus deaths. 

     

    net_overseas_migration_Nov_28_23

     

    So, of the overseas immigration, how significant is 454,000? 

     

    It’s not just a big number. 

     

    It’s effectively like the entire population of the ACT landing and looking for somewhere to live. 

     

    It’s over double what we were averaging pre-COVID, which was 217,000. 

     

    And it’s not over yet. 

     

    Over the next 5 years, it’s expected to reach 1,755,000 people.

     

    That’s a drop on today’s numbers, but still miles ahead of the numbers we’ve been on. 

     

    The Institute of Public Affairs has worked out that 117,000 new households will form every year from immigration alone. 

     

    And this is in addition to the 69,617 required already for ‘natural increases’ in the population. 

     

    This is a total of 1,119,702 houses required between now and 2028, despite only 866,900 forecast to be built. 

     

    See the issue?

     

    Whichever way you look at the numbers, the big picture is straightforward. 

     

    We have a population boom that far exceeds our ability to house people. 

     

    The effect of this is a higher demand for houses. 

     

    And since we’re falling way short of building enough houses, it means more demand for existing houses and houses currently in the pipeline. 

     

    Even more significant is that many new immigrants are ‘cashed up’, ready for the market. 

     

    Australia recently regained the top spot as the top global destination for high-net-worth individuals (HNWI). 

     

    australia_attracts_millionaires_Nov_28_23

     

    And while most immigrants are not purchasing in Point Piper or Vaucluse, many immigrants are paying well over the asking price for a house in the right school zone, near their children’s university, or where restaurants and amenities are close by. 

     

    The reality of this situation for home buyers is stark. 

     

    House prices will continue climbing thanks to record demand and critically low supply levels, with a flood of new money thrown into the mix. 

     

    And the only conclusion is that house prices will continue to soar for years to come, with investors coming out the clear winners.