There’s much talk in real estate about how the Covid-related fall in immigration might affect property prices over the next few years.
If you’re thinking of buying at the moment, it’s worth exploring. Property prices have long been sustained by new people settling in Australia. Immigration hovered at an annual 200,000+ before Covid. But government predictions that the stream of new Australians will decline has been flagged as a factor that could hurt demand for construction and investment properties.
However, there’s always been a shortfall in the number of new properties needed in Australia, and that means even without migration demand should remain solid.
Predictions of price collapse made headlines due to Covid and the halt in immigration when the pandemic and lockdowns first hit. Even the Commonwealth Bank forecast a 30% drop before reversing its position.
But home values appear likely to continue to be strong for several reasons. Firstly, we enjoy record-low interest rates, making it more affordable to enter the market or climb the property ladder.
Governments – both state and federal – have rolled out grants and savings schemes to help first-home buyers and offer discounts on stamp duty. Additional incentives have been provided for new home construction, and this has been widely taken up.
We’ve also seen fewer properties for sale. This lack of supply has created pent-up demand on the buy-side, thus further bolstering values.
The most significant short-term impact of reduced immigration has not been on the family home but on apartments, where rental demand significantly influences values. After a few hairy months, even that threat is now easing.
Rents were initially under pressure because of the Covid-related student exodus and shortage of new residents who’d normally rent before buying. Yet, in Sydney and Melbourne – the two cities most in the crossfire – the situation for landlords has eased in general terms.
The value of your home is more likely to depend on its design, structural quality and local factors, such as its position, availability of amenities, and proximity to cafés, restaurants and schools.
There are thousands of micro-markets in Australian real estate, each one performs slightly differently. So what really matters is what’s happening in your neighbourhood and you should speak to local real estate agents to discover what is happening specifically in your area.
This article is provided for general information only and does not take into account the specific needs, objectives or circumstances of the reader. Before acting on any information, you should consider whether it is appropriate for your personal circumstances, carry out your own research and seek professional advice.