Overseas buyers prioritise lifestyle, value for money
International buyers are still eyeing off Australia as a great place to invest in property with New Zealanders the most active, while Chinese investors are showing a renewed interest, according to a new report.
New data from PropTrack revealed overseas searches for properties to buy and rent on realestate.com.au have continued to boom over the past quarter and are now well above pre-pandemic levels in 2019.
According to the PropTrack Overseas Search Report - October 2023, searches for Australian properties from overseas property buyers increase dramatically the past three months, with buy searches rising 11.5% with rent searches up 7.8%.
New Zealand searchers remain the most active, says the PropTrack report, with rent searches up 38% on this time last year and searches to buy up 7%.
Rental searches were up from September 2022, especially in China and the UK, rising 25% and 15.5% respectively, with rental searches from China nearly double the volumes seen before the pandemic.
Searches to buy were up year-on-year, particularly in China, which increased by 36.9%.
Melbourne proved the top pick of locations for overseas investors looking to rent and buy in the past quarter, however the Gold Coast was also very popular as it was the second most searched location to buy in the country, and third most searched location to rent in the past three months.
When it comes to locations to buy, the greater region of Brisbane ranked third, and Sydney fourth.
Perth’s CBD and inner suburbs was the fifth most searched location to buy in, just ahead of the greater region of Perth which was ranked sixth.
Nathan Massie (pictured above left), managing director of Melbourne mortgage brokerage Sprint Finance, said the amount of interest shown by overseas investors in the Melbourne market came as no surprise.
“What has been surprising is the sheer volume of enquiries of both expats and non-citizens now looking to purchase to invest,” Massie said. “In the COVID years the enquiries dropped to a trickle, and in the last six to eight months they have been increasing significantly.”
Massie said investors remained very focused on getting value for money.
“If your choice was between Sydney or Melbourne, you're going to be paying 30% to 40% less for a property that's the same distance from the city.
“In places like [Melbourne’s] Brunswick and Carlton which are city fringe areas, you can still pick up homes for around the $1 million mark. You would need to settle for an apartment in a comparable suburb in Sydney.”
Massie said while some buyers initially purchased a property for investment, many have plans to eventually live in the property themselves or have their children stay there while they attend a nearby university.
“There's also been a lot larger demand for houses over apartments,” he said.
Massie said while Melbourne’s appeal to the overseas market was not new, Perth was now seen as one of the more popular cities for overseas investors.
“This is something we have never seen before,” he said.
Helen Avis (pictured above right), director of finance at Perth brokerage SMATS Services, who was named Pepper Money Broker Of The Year – Specialist Lending at the 2023 Australian Mortgage Awards, said she was not surprised by Perth’s popularity with buyers, and that it ranked so highly in the PropTrack report.
“Perth is a beautiful city. Our lifestyle and weather are the most desirable in the world,” Avis said.
“Our economy and job market are strong; wages are generous, and our school system is attractive for families, and we are a politically stable and safe place.
“Who doesn’t want to lap up the sunshine and endless coastline that Perth has on offer?”
According to Avis, Perth is one of the most affordable capital cities in Australia with a median house price is $570,000, according to property site REIWA.
“With a budget of $1 million, buyers are able to secure a lovely four-bedroom, two-bathroom home in a desirable suburb close to the city. When you compare that to the east coast, a $1 million budget doesn’t stretch very far at all, for example the median price in Sydney is $1,098,821 (according to CoreLogic).
“The price of housing and cost of living are certainly attractive to migrants.”
According to Avis, population growth and dire housing supply shortages are the key factors driving the Perth property market now.
“The distinctive disparity between supply and demand is rapidly forcing housing values upward,” Avis said.
“WA is experiencing the fastest population growth rate of any Australian state and territory. Our population grew by 2.8% to 2.855 million in the year to March 2023.
“The March quarter saw one of the biggest recorded population increases at 0.9% (according to the ABS). We are certainly seeing an influx of overseas and interstate migration.”
Avis said because Perth’s rental vacancy rate was below 1%, it was challenging for migrants to secure rental properties so ‘this has resulted in higher interest in purchasing property from this market segment’.
She said apart from strong interest in Perth properties from investors from the east coast of Australia, Australian expats in South East Asia, Dubai, London and US also showed a keen interest in the WA capital’s property sector.
“We are experiencing increased interest from USA, UK and NZ migrants, as well as Sydney, Brisbane and Melbourne looking to relocate. “
Despite the increased interest, overseas searches on realestate.com.au comprise just 3% of total buy searches and 5% of total rental searches.
