Global investors find gold down under in the Aussie property market

Australia’s real estate market thrives as international buyers seize opportunities 

Foreign buyers are increasingly investing in Australian real estate, with the latest data revealing a significant uptick in international purchases. According to ABC News, the Australian Taxation Office (ATO) unveiled that foreign buyers have made 5,360 residential real estate purchases worth AUD4.9 billion in the 2022-2023 financial year. This marks an increase from 4,228 purchases valued at AUD3.9 billion in the previous year. 

The resurgence in foreign demand follows a pandemic-induced downturn, with most buyers originating from China, Hong Kong, and India. Real estate professionals expect this trend to continue, driven by various factors, including Australia’s safe political environment, quality of life, and educational opportunities. 

The appeal of Australian real estate 

Melbourne’s south-east has become a particularly popular destination for overseas buyers, especially those from China, Hong Kong, and India, who are looking to spend over AUD1 million. Leigh Kelepouris, a Ray White real estate agent, notes that many of these buyers are financially well-off, often having sold properties overseas to fund their purchases in Australia. 

“Many families are wanting to set themselves up here, moving their money over, and sometimes taking on loans with favourable terms,” Kelepouris says. 

The trend is not limited to Melbourne. Realestate.com.au revealed that Brisbane and Perth have also become hot spots for Asian buyers, who continue to see Australia as an attractive investment destination despite its reputation for being the most unaffordable real estate market in the world. 

Asian buyers lead the charge 

The Foreign Investment Review Board’s (FIRB) latest quarterly data underscores the dominance of Chinese buyers in the Australian real estate market, reported news.com.au. Chinese investors accounted for AUD800 million of the AUD1.9 billion in residential real estate investment proposals approved in the last quarter of 2023. Hong Kong, India, Vietnam, and Taiwan each contributed an additional AUD100 million in purchases. 

Over the full 2022-2023 financial year, Chinese investors purchased 2,601 homes worth AUD3.4 billion, up from 2,317 homes worth AUD2.4 billion in the previous year. This surge in foreign investment is part of a broader trend, with foreigners from all countries purchasing 5,360 homes worth AUD4.9 billion, a 26.8 percent increase from the prior year. 

Drivers of continued interest 

Several factors contribute to the sustained interest in Australian property among Asian buyers. According to Benson Zhou, director of hotels for CBD and metropolitan sales and state head for Asia markets at Savills Australia, as well as member of the PropertyGuru Asia Property Awards (Australia) judging panel, this is due to: “Short of supply and high volume of new migrants coming every year, the freehold land that is attractive to Asian buyers, and it’s affordable compared to Asian countries.” 

Furthermore, Australia’s proximity, lifestyle, large immigration intake, and educational opportunities make it a preferred destination for Asian buyers. Despite the high prices, the benefits of investing in Australian real estate outweigh the costs for many international buyers. 

Implications for the local market 

The influx of millionaire buyers and the rising popularity of cities like Melbourne among international home seekers are expected to impact the local real estate market and housing policies significantly. Zhou predicts, “We have seen a significant price increase due to the rise of construction cost, and it will continue to grow. Australia is already the top destination for overseas migrants due to national security, education, lifestyle, and more.” 

As foreign demand continues to drive up property prices, it will be crucial for policymakers to address the challenges of housing affordability and supply. The real estate market must balance the interests of international investors with those of local residents to ensure sustainable growth. 

Celebrating excellence in real estate  

The 6th PropertyGuru Asia Property Awards (Australia) 2023 highlighted the achievements of various developers contributing to Australia’s vibrant real estate market. Aqualand was recognised as the Best Developer, Best Luxury Developer, and Best Mixed Use Developer. Other notable winners included Salvo as the Best Lifestyle Developer and Skyland Group as the Best Luxury Boutique Developer. 

These awards celebrate the excellence and innovation within the Australian property sector, showcasing the country’s appeal to both domestic and international investors.  

Australia’s real estate market continues to attract significant foreign interest, particularly from Asian buyers, despite its high prices. As demand remains strong, the impact on local markets and housing policies will be closely watched. The country’s reputation for safety, quality of life, and educational opportunities ensures that it remains a top destination for international property investors.

Know any award-worthy residential, commercial, or industrial projects in the country? Nominate them for the 7th annual PropertyGuru Asia Property Awards (Australia) on or before 2 August 2024. To know more, visit AsiaPropertyAwards.com/Award/Australia/. 

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].