Migration levels affecting rents, not house prices: CoreLogic

CoreLogic has revealed Australia’s hot spots for migration and found that areas dominated by overseas migration were more likely to have increased rent rather than higher house prices.

The Australian Bureau of Statistics (ABS) found that Australia’s population increased 2.5 per cent (or 660,000) in the 12 months to September 2023. The ABS also revealed the areas with the highest migration levels (including internal and overseas migration) in the financial year ended 30 June 2023.

Carlton, a suburb in northern Melbourne, had an 18.4 per cent (or 3,317 person) increase in its population. The suburb had an overall population increase of 3,722, with a reduction of the internal population by 405 people. Rent prices in the area subsequently increased by 18 per cent, while house prices decreased by 10.9 per cent.

CoreLogic’s analysis of the data said that the largest short-term impact on regions that experienced rapid overseas migration is on the rental market.

Census data from the ABS in 2021 found that 65 per cent of temporary migrants were renters. Speaking on high levels of migration, Eliza Owen, head of research at CoreLogic, said: “Given over 90 per cent of net overseas migration to Australia in the year to September 2023 were temporary migrants, there could be an even higher portion of recent migrant arrivals skewing to rentals than usual.”

CoreLogic found a positive correlation between net overseas migration and a 12-month change in its rent value index; however, it did not find a discernable relationship between migration and home values in the top 10 migration hot spots.

There was also no relationship between migration and rent or home values in areas that saw high levels of internal migration. Owen explained: “That’s likely because the fresh housing supply of these areas is determining the population growth, and not the other way around.

“Off-the-plan house purchases likely mean that buyer demand in the suburb was spurred before people moved to these areas.

“In some areas associated with urban sprawl, home values have not risen strongly at the same time migration volumes have been high, and may have to do with more balanced levels of supply, or the timing of off-the-plan purchases.

“The only migration-housing performance relationship demonstrated in the data over the short term, and weakly at that, continues to be between overseas migration and rents.

“The takeaway is that high migration levels can have a multitude of impacts on housing markets, which may depend on other factors like supply and affordability.”

The research comes following data from PropTrack that revealed the most affordable regions in Australia.

[Related: PropTrack reveals Australia’s ‘affordability havens’]