Annual overseas migration and housing markets: Evidence from Australian neighborhoods

This paper examines the impact of net overseas migration (NOM) on residential property marketsusing annual, neighborhood-level data for Australia. We leverage an instrumental variableapproach based on historical immigrant settlement patterns to isolate plausibly exogenousvariation in migration flows. We find that a 1% increase in NOM, as a share of the local population,raises unit rents and prices by 5.0% and 1.3%, respectively, and increases house rents by3.6%. These effects are more pronounced in areas with low rates of dwelling approvals, suggestingthat housing supply constraints amplify the response of prices and rents to migration.In contrast, house prices decline by 1.3%, a pattern concentrated in older neighborhoods andconsistent with displacement dynamics, for which we present supporting evidence.