Chapter 1: What impact does migration have on the Australian property market?
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And welcome to another episode of the Real Estate Breakfast, available on iHeartRadio every morning and also on Spotify and Apple and wherever you get your podcasts from. Friday morning, yes, it's back with us, the 14th day for October, nearly halfway through the month. November will be here before we know it and coming up we are going to be looking at market momentum and migration.
But what does that mean? Well, if you've got property plus migration, the net result of that will equal momentum and Rich Harvey is here very shortly.
Chapter 2: How have rental prices changed in Sydney recently?
and we're going to be talking about all of that. Well, we know that the rental market is extremely tight, and Domain released its rent report for the September quarter yesterday, and it tells us that Sydney tenants are facing record high house and unit rents as low rental vacancies drive up competition and prices for homes, and house rents jumped $30 a week
to a record median of $650 over the September quarter, and new figures also show that unit rents increased $25 to $550. Domain's rent report also showed that rents fell or held steady in some areas, so that's some good news. However, house and unit rents each climbed 4.8% over the quarter and were up 14% and 14.6% respectively over the year.
Now, it's the largest annual increase in unit rents on domain records, which go back to 2004, and it's the largest jump in house rents since 2009.
Chapter 3: What was the effect of the international lockdown on migration?
Really not telling us anything we didn't know, but it is great to see those numbers with clarity in terms of exactly what is taking place in the rental market, particularly in Sydney.
Informing you every morning from 6.30, seven days a week on The Real Estate Breakfast. It's the main centre forecast with PRD, selling smarter every day.
All right, on this Friday morning, let's have a look at your weather around Australia. And a bit of a mixed bag in Sydney, probably rain and showers this morning. They say it should be then mostly fine this afternoon or later in the day, 24.
is your forecast high in melbourne today a few showers with 18 brisbane a possible shower or two 28 is your forecast high and in perth today mostly blue skies and sunshine with 21.
Chapter 4: When can we expect the return of normal migration levels to Australia?
It's your weekday real estate breakfast with news, interviews and predictions every morning on The Real Estate Podcast. Let's Talk Property, a podcast series with Rich Harvey.
And we're looking today at the changing tide of the property market. When markets were rising quickly, a lot of people became absolutely convinced that the increases in property prices would go on and on and up and up. And then as the property market softened, a lot of people believed the downturn was entrenched with no sign of recovery.
And we see property buyers holding off their buying decisions and some people with loan pre-approvals are not in a hurry to move. And many are convinced that the market will fall even further. So the question this morning, is there anything on the horizon that is going to shift market momentum? Well, there is, and that is our subject. Migration will have a massive impact on property pricing.
So to help you and to help me understand this dynamic better, We have got Rich Harvey back from his holiday, CEO and founder of propertybuyer.com.au. And welcome back, energised Rich Harvey.
Thanks very much, Craig.
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Chapter 5: How are current migration numbers affecting housing availability?
Yeah, I had a great break. And actually, all my team said, Rich, you're looking really relaxed and refreshed. I went, yep, you betcha, ready for the last quarter of the year. So I had a great trip away.
Well, it makes it easy too, doesn't it, to get these last three months and then we're into that Christmas New Year. So let's have a look at the international lockdown first with this subject, because the international lockdown was pretty brutal when it was taking place. But just how severe was it on our economy?
Craig, it was actually quite severe. It had a massive impact on Australia's migration.
Chapter 6: What challenges does Australia face in attracting skilled migrants?
Not only did Australia lock down, but the world did as well. And that impacted our population significantly. You know, over the last decade, 60% of our population growth has come through migration and the rest of the population growth has come through natural increase. So migration is the fundamental means by which Australia grows. And with its closed borders, that suddenly came to a halt.
And if you look back between 2020 and 2021, we actually had more people leaving our shores than arriving here. So we actually had a period of what we called net overseas migration decline. And the only other time in history that has happened was during World War I and World War II.
Wow, yeah. So you've got to go back a number of years since it last took place. And as I said, it was brutal when we did lock people out from coming into Australia. And to get a better handle on this, what number of migrants were kept at bay during the lockout period?
Chapter 7: How is the government responding to the migration backlog?
Yeah, if we look at the stats, Craig, in 2019, we gained 247,620 people through my net overseas migration. But from April 2020, I mean, remember COVID hit in sort of March 2020. So from April 2020 to the end of 2021, migration was basically zero. The short term migration numbers were around half a million less than they otherwise would have been.
So it's really interesting that those numbers are quite significant. And what's interesting is just why did the market go up so much, even though migration was low? And the simple answer was people just wanted to improve their lifestyle, their digs. They wanted a study. And we also had a lot of expats coming back to Australia as well. So, yeah, pretty significant numbers that were kept at bay.
Yeah, and, you know, I should make this comment. We often hear, oh, that flood was one in 100 years.
Chapter 8: What are the implications of rising migration for the housing market?
I mean, we're not likely to see this ever again in our lifetime.
No, I don't think so at all. I don't think, well, I shouldn't say that. We don't know. You don't know what the X factor is going to be, you know, whether there's going to be another world war or another COVID outbreak or some other kind of pandemic. We just don't know.
And a lot of listeners for months have been thinking, how quickly can we turn this migration situation around? People wonder, when will the normal volume of the international migrants return?
Even though our borders are now fully open, it doesn't mean that we'd suddenly instantly get a flood of new migrants coming back. So we used to average around 230,000 people a year coming into Australia. So the ABS numbers are currently showing that migration is running around half its pre-COVID levels. So about 120,000 at the moment.
But the government is super keen to welcome back migrants with open arms. In fact, we had a cap on permanent migration of 160,000 persons, and that's recently been lifted to 195,000. And on top of that, you've also got a lot of temporary visas and other sponsored visas that are also coming. So in short, we should be back to about 240,000 before you know it.
And the thing is, all of these migrants are going to be landing in the middle of Australia's greatest rental crisis. All these migrants right now are coming in. where are they going to be living? We're already starting to see it with students coming back. Like a lot of those suburbs around the city fringe, we're starting to see the rents now having an impact in those student markets as well.
Australia is competing with many, many other countries for skilled migrants, and we have to attract more migrants to get back into Australia. But it is going to take a little while to get back up to full volume again.
Yeah, and Rich, you mentioned that between 200,000 and 250,000 people used to come into the country every year. Are these numbers sufficient to meet the shortfall required to keep our population growth on track, and just as importantly, our economy at full employment?
It's funny you mentioned employment there, because if we look at the national unemployment rate at three and a half percent, honestly, that's the lowest figure I've ever seen and lowest figure I ever know in living memory. Being an economist in my former life, I used to track all of those numbers and I still do. And we basically have a massive labour shortage.
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