Borders reopen
The Macquarie Macro Strategy chart via Justin Fabo below suggests that immigration levels spiked back in December, due to the return of international students and working holiday visa holders.
The December figures were likely skewed higher by a record number of Australian residents returning to the country, having previously been effectively locked out by quarantine rules.
The actual number of new visitors to Australia did increase, but there's probably a long way for this increase yet to return before things are back to pre-COVID norms.
Rental market pressures
Reserve Bank of Australia research has previously underscored that a large proportion of new migrants to Australia tend to rent their first home, before later transitioning to home ownership.
International students also comprise a large proportion of new migrants, and tend to be less likely to be in a position to purchase than the average household, thus adding to the pool of rental demand.
Property research group SQM Research reported that rental vacancies dropped quickly from 57,558 to 47,977 in January, representing a sharp drop in the national vacancy rate from 1.6 per cent to just 1.3 per cent (which is well below the 2 per cent seen a year earlier).
This is the lowest national vacancy rate in 16 years.
The national vacancy rate did get lower once before over this side of the Millennium, in 2006-7 as Australia's mining boom years saw the economy dally with full employment.
Source: SQM Research
Rental vacancies have reportedly continued to fall in February.
Borders reopen to tourists
Tomorrow the international borders will finally reopen to tourists - except for Western Australia, which will follow suit on March 3 - for the first time in 23 months, meaning that there's a two-year backlog of travellers waiting to get in (minus those dissuaded by vaccination requirements and testing rules).
14 airlines will be operating flights in and out of Australia effective Monday, so many Australians will be heading overseas too, of course.
According to Sydney Airport, via the AFR, 35 of 44 airlines that stopped flights will be fully operational by the end of March.
Rental vacancy rates were already at extremely tight levels across much of the country in January, though not yet in Sydney (16,357 vacancies) and Melbourne (17,112 vacancies), representing vacancy rates for those cities of 2.1 per cent and 2.7 per cent respectively.
Most new arrivals into Australia tend to head to Sydney and Melbourne, in that order.
Over the past two years the number of temporary visa holders in Australia has crashed by more than ¾ million from a pre-COVID high of 2.4 million in 2019 to a recent low of 1.6 million.
Melbourne's property market has quite a bit more slack, given vacancy rates only fell from 3.2 per cent to 2.7 per cent in January.
Vacancy rates in Sydney CBD, on the other hand, are already back below pre-COVID levels, and have been falling quickly.
The current trajectory suggests Sydney may be heading for a rental property shortage before the end of this financial year, as full employment hoves into view for Australia for the first time since 2008.
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A promising week for serious COVID-19 instances in Australia saw ICU cases drop to 190 (down 33), and ventilator cases drop to 74 (down 14).
Hospital cases fell by 543 over the course of the week.
