More renters coming from overseas could boost property investment

Australian property investors have likely been keeping tabs on the rental market of late, as more people begin to arrive into Australia from overseas.

This is important because rental demand softened in some CBDs over the pandemic period, with fewer new visitors coming to our shores.

The pre-COVID rental market was strong by comparison, with Australia seeing some 1.8 million overseas arrivals per month from 2015-2020. Many new arrivals end up renting in central city locations.

Now as more new people show up, SQM Research’s data suggests that property owners may be able to feel more confident about the market picking up.

However, SQM also noted that the national residential property rental vacancy rates rose in April of this year, but only slightly.

Is the market likely to improve?

The rental market is bouncing back after a two year struggle, based on ABS data.

Simply put, people are coming to Australia to live and work temporarily.

For example, overseas arrivals totalled 195,760 through December (up from 34,670 arrivals in December 2020) and initial estimates suggest the number was higher still for January.

The ABS data shows that total arrivals to Australia began rising weeks earlier, as international students, permanent residents and Australian citizens were welcomed back.

So in 2022, there’s a chance the rental market might improve.

Compared to December of last year, arrivals were only at 10.4% of the December 2019 level, with around 64% of visitors residing in Australia short-term, here for less than one year, as per the ABS data.

Why might there be more renters?

From the 21st of February 2022, the Australian Government opened the borders and welcomed back double-vaccinated tourists and visa holders from around the world.

So one might assume more arrivals could mean more renters and therefore greater demand in the market for landlords.

How long are potential renters staying in Australia?

• 34% intended to stay less than one month
• 52.2% intended to stay one to six months
• 52.2% intended to stay one to six months

Who benefits?

Popular tourism destinations like Sydney, Melbourne, Brisbane, Cairns and regional Tasmania have seen increased rental applications, meaning property owners in these areas will benefit.

This should mean a lift of occupancy rates and revenue across the short-term accommodation rental market and commercial accommodations.

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