Where will all our new migrants live?

Australia is in the midst of a migration surge with 715,000 net arrivals expected over the next two years alone, according to government forecasts.

While it is clear that Australia’s labour market is tight and many industries are in desperate need of more skilled workers, the challenge is how are we going to house all these new people?

Migrants’ typical path in terms of housing is to rent first, either close to their employment or in areas where there is an established community of fellow countrymen or family already living there. Property data house CoreLogic estimates it takes about five years for most migrants to buy a home. However, Australia is in the midst of a rental housing crisis, and this may be leading to more migrants buying a home immediately, thereby adding to demand and contributing to the somewhat surprising rate of home price rises this year, despite significantly higher interest rates.

“A significant lift in net overseas migration has run headlong into a lack of housing supply,” says CoreLogic research director Tim Lawless. Given the extraordinarily low rental vacancy rates across Australia today, Mr Lawless said “it’s reasonable to assume more people are fast tracking a purchasing decision simply because they can’t find rental accommodation.”

So, where will all our new migrants go?

New data from property advertising portal realestate.com.au (REA) provides some insight into where migrants are looking for their first home. By analysing page views among overseas site visitors over the past six-month period, REA can reveal which suburbs are capturing the most interest.

It’s worth noting that ‘overseas buyers’ is a broad category representing many different types of property purchasers, and the data does not distinguish between them. Some may be impending new arrivals such as families or international students. Some may be the parents of international students seeking to purchase a home for their child while studying here, and some may be expats researching the market ahead of their return home. The rest may be foreign investors seeking to invest capital. There has been a resurgence in foreign investment in 2023, particularly from China where the local property market is cooling as the economy enters a deflationary period.

REA senior data analyst Karen Dellow says interest in Australian property from overseas has never been higher. According to the data, Melbourne is the most searched location in Australia among overseas visitors to the REA site, followed by the Gold Coast, Brisbane CBD, and Sydney CBD. Also within the top 20 locations are Perth CBD and its inner suburbs, the Queensland Sunshine Coast, Adelaide CBD, and the premium Melbourne suburbs of Brighton, South Yarra, and Camberwell.

Historically, the top two locations for new arrivals have long been Melbourne and Sydney, but the data implies that Queensland is gaining more attention. Half the locations in the top 20 suburbs are in Melbourne and 25% are in Queensland.

The data also shows the suburbs gaining increasing interest from overseas buyers. Ms Dellow said searches for properties in Brunswick East, in inner Melbourne, have increased by 60%, closely followed by Carlton North. “Both suburbs have seen significant development in the past few years and are close to the University of Melbourne and the CBD,” Ms Dellow said. “Searches for Ashgrove in inner Brisbane have increased by 45%, and the Sunshine Coast’s Mooloolaba; and Burleigh Heads on the Gold Coast, have also become more popular.”

By any traditional measure, Australia’s property market should be moving in sync. Instead, it is fragmenting.

New research from MaxCap, led by Head of Research Bruce Wan, paints a picture of a market no longer defined by national trends, but by sharp regional divergence, where performance gaps between cities are widening, and the smartest capital is moving accordingly.

At the top end of the ladder, Perth and southeast Queensland are surging ahead. At the other, Melbourne and Auckland are only just beginning to recover from recent downturns. And sitting squarely in the middle is Sydney, steady but constrained.

The takeaway is clear: the era of relying on headline markets is over.

The rise of the unexpected leaders

Brisbane and the broader southeast Queensland region have emerged as standout performers, driven by population growth, infrastructure investment and a sustained undersupply of housing.

According to the report, housing values in the region have continued to accelerate, supported by long-term tailwinds including the 2032 Olympic Games and a decade of relatively subdued price growth prior.

Perth is telling a similar story, albeit for different reasons. Once heavily tied to commodity cycles, the Western Australian capital is now benefiting from a broader base of economic drivers, including defence spending and sustained resource sector strength.

The result is a housing market that remains one of the strongest in the country, even as price growth begins to ease from its peak.

Sydney holds, but doesn’t lead

For Sydney, the story is more nuanced.

While prices continue to climb and the city remains Australia’s most expensive market, affordability constraints are clearly limiting its pace. Residential growth, while positive, lags behind smaller capitals, and commercial sectors are being held back by softer demand in key industries.

There are, however, signs of momentum building. New infrastructure, including the western Sydney Airport and expanded rail networks, is expected to unlock development opportunities and support future growth, particularly in emerging precincts.

Still, the report positions Sydney firmly in the “middle of the pack”, no longer the automatic frontrunner for investors.

Melbourne’s slow reset

Melbourne, once a consistent performer, has spent recent years recalibrating.

Extended lockdowns, combined with new state property taxes, have weighed heavily on investor sentiment and pricing, particularly across the commercial office sector. Residential values have also underperformed, though for different structural reasons.

Now, there are early signs of recovery.

Improved affordability, population growth and a stabilising economic backdrop are beginning to draw buyers back into the market, with both residential and commercial sectors showing tentative signs of improvement.

Auckland’s turning point

Across the Tasman, Auckland has faced its own challenges, particularly from an outflow of younger workers to Australia, which has dampened demand and stalled price growth.

But here too, the tide appears to be shifting.

A return to positive migration, lower interest rates and policy changes — including the easing of foreign buyer restrictions — are expected to support a gradual recovery, alongside renewed interest from offshore capital.

A market that rewards precision

If there is one unifying theme, it is this: broad-brush strategies no longer work.

MaxCap’s research highlights that the most compelling opportunities are increasingly found outside the traditional powerhouses of Sydney and Melbourne, requiring investors to take a more targeted, locally informed approach.

“Given these persistent performance gaps, there is plentiful scope for alpha returns, just by picking the right locations and market segments,” the report notes.

In other words, success in this market is no longer about being in property — it is about being in the right property, in the right place, at the right time.

And increasingly, that place may not be where you expect.

Where will all our new migrants live?

New data shows overseas interest in Australian property has never been higher

New research shows a widening divide across Australia and New Zealand’s property markets, with investors increasingly forced to look beyond traditional strongholds to find real returns.