Australian Immigration Decline: Where is the Property Market Heading?

Australian Immigration Decline: Where is the Property Market Heading?

At the end of last year, headlines about the decline in Australian immigration data dominated the media. However, don’t be misled by appearances—this doesn’t mean the Australian property market can breathe a sigh of relief. On the contrary, it might be a warning sign before the storm hits.

According to the latest data from the Australian Bureau of Statistics (ABS), net overseas migration for the 2023-24 financial year was 446,000, a 16% drop from the record high of 536,000 in 2022-23. Despite the decline, this figure is still equivalent to adding a population the size of Canberra.

Why Has Immigration Declined?

There are two key reasons for the drop in immigration numbers.

First, the number of arrivals fell by 10%, particularly among temporary visa holders such as international students and working holidaymakers, whose numbers dropped significantly.

Second, departures increased by 8%, meaning more people have left Australia in recent years.

However, even with the decline, the net migration figure of 446,000 still far exceeds the federal government’s target of 395,000 for 2023-24.

Who Are These Migrants?

The largest group is international students, with 207,000 arriving in the past year. India, China, and the UK remain the primary sources. Notably, the median age of these new migrants is 27, and they are likely to rent before buying, sustaining demand in the rental market.

What Does This Mean for the Housing Market?

While the short-term reduction in arrivals might slightly ease rental demand, the overall situation remains unchanged—we still face a long-term housing supply shortage. Even with the decline in immigration, tens of thousands of new residents continue to flock to Australia’s major cities each month.

This ongoing population inflow continues to drive up demand for rental housing, which is already in severe shortage.

Vacancy rates remain at historic lows, and although rental growth slowed at the end of last year, rents will continue to rise due to the imbalance between supply and demand.

Moreover, the impact of immigration isn’t limited to the rental sector.

Most people aspire to own their own homes within a few years, which will further exacerbate the pressure on our already limited housing stock in the coming years.

What’s the Signal for Investors?

For property investors, the good news is that this dynamic highlights a key point—demand isn’t going away.

Don’t forget, migrants tend to choose our major cities, particularly Sydney, Melbourne, and Brisbane, where most job opportunities are concentrated.

With new housing construction slowing, competition for quality properties will only intensify.

This means that well-located investment properties in high-demand areas will continue to deliver steady capital growth and rental returns.

In Summary

The decline in immigration numbers doesn’t mean the pressure on the housing market will ease immediately. For investors and homebuyers, understanding these trends is crucial. While the market is uncertain, opportunities often lie within the changes. Let’s keep a close eye on the future direction of Melbourne’s property market and uncover the investment opportunities it holds.