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Why Have Residential Rents Stagnated?

Apart from the loss of international students and contracted overseas labour, more than 60,000 people departed Sydney and Melbourne to other parts of the country in the 12 months to March 2021 (according to the latest ABS figures released on 3rd August, 2021).

This exodus of residents from Sydney and Melbourne is a trend that has emerged following the COVID-19 recession with 31,600 residents departing Sydney and 32,000 residents departing Melbourne in the year to March, 2021.

Sydney also lost to other parts of the country over the same time which is consistent with the trends of the past 20 years. The shift in population and drop in immigration are the main drivers of the tight rental market that exists across the country, other than in Sydney and Melbourne.

Regional areas have seen a greater increase in building approvals than capital cities as the population shifts toward lower density areas. The 220,000 building approvals in 2020/21 is the most in a financial year since 2017/18. Given that the population is moving interstate and building new homes, it is unlikely that this is a new trend but rather it is a long term trend that has been compounded by the loss of overseas migration that has underwritten economic growth in recent decades.


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