The National Housing Finance and Investment Corporation (NHFIC) this week held a webinar discussing the “State of the Nation’s Housing: 2021 and beyond”.
This webinar included an interesting presentation by NHFIC’s Head of Research Hugh Hartigan explaining how the collapse of immigration and international students into Melbourne and Sydney has caused double-digit declines in rents across inner-city areas:
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By contrast, across the rest of the nation vacancy rates are tight and rental growth is strong.
According to Hugh Hartigan:
“When the rate of housing formation is low, as we’re seeing now, weakness in rents comes through, particularly in those areas affected by the shock. It’s less of a house price story. House prices are more driven by financial flows and credit.”
Obviously, we can expect rental vacancies to remain high and rents to remain weak across Melbourne and Sydney as long Australia’s international border remains shut to migrants and international students.
Immigration is the key driver of household formation and rental demand in these two cities, especially with respect to high-rise apartments.
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