Migration to Australia largely ceased during COVID but a new surge is underway.  International students are returning to study and more skilled migrants are gaining entry to take the jobs that employers haven’t been able to fill in this extremely tight labour market.  

Australia is expecting 1.5 million migrants to move here over the next five years, according to the Federal Budget, and we’re certainly seeing a resurgence of overseas buyers in the property market. 

The end of COVID-19 restrictions in China in late 2022 is a key reason for the recent increase in international buyers, as China remains one of our biggest source countries for migration. 

The latest Australian Bureau of Statistics figures show the top five countries of birth for migrant arrivals in the financial year 2022 were India, China, Australia, Nepal and the Philippines.

Real estate portal realestate.com.au reported the highest level of search activity from overseas ever in the March 2023 quarter, led by New Zealand, the United States, the United Kingdom, and China.

With the COVID emergency over and borders reopened all over the world, overseas buyers are once again free and able to travel to Australia safely to look at residential property for either their own owner-occupation, for their children attending university here, or purely for investment. 

International buyers are interested in all price ranges, but activity is strongest at the upper end of the market.  For example, in Sydney, we’re seeing overseas buyers mostly in the $4 million-plus bracket. 

Wealthy new migrants are buying established properties for their families in desirable affluent areas with great schools and amenities. 

Other overseas buyers are purchasing a home for their children to live in while they’re studying at university. They’re also targeting blue-chip areas in the hope of superior returns on their investment.  

The latest NAB Residential Property Survey showed an increase in foreign purchases of both new and established property over the March 2023 quarter. 

International purchases represented 7.9% of new property sales, up from 5.2% in the December 2022 quarter. This is below the long-term average of 9% but it is clearly on the way back up. 

The steepest rise in foreign purchases of new property was in NSW, where 16.2% of sales went to foreign buyers – up from 6.7% in the December quarter -- and the highest level in eight years. 

Among established property sales, the market share of foreign buyers rose from 2.8% in the December quarter to 3.8% in March. This is also below the long-term average (5.2%) for now. 

Activity was highest in Queensland where foreign buying of established homes went from 2.6% in the December quarter to 4.6% in the March quarter. 

Overseas migration is currently the main driver of Australia's population growth, accounting for just over 55% since 2001, according to the Bureau of Statistics. 

International students are a big part of this, with Australian universities among the most desirable tertiary institutions in the world.  Students’ biggest impact on property is in the rental sector.  

CoreLogic data shows that combined capital city rents increased by a record 11.7% over the past year. This was largely underpinned by demand for apartments – the typical property of choice for students and other young Australians. 

Foreign investors are also back in the property market. 

Under Foreign Investment Review Board (FIRB) rules, buyers who live overseas are only allowed to buy new or off-the-plan properties, or knockdowns if they intend to build more than one home and thereby add to the housing stock. 

The latest FIRB figures show $4.3 billion worth of residential foreign investment approvals over the first two quarters of the financial year 2023. This indicates rising interest given the total investment for the whole of the 2022 financial year was $7.6 billion. 

China is our biggest source country for residential investment, followed by Hong Kong, Vietnam, the United Kingdom, and Singapore.  

The bounce-back in international buying activity overall is strong and significant this year. Following the pandemic, a lot of people are wanting to park their currency in Australian dollars and in a safe and stable political environment.

Most overseas buyers of Australian property have significant wealth behind them. In particular, we are seeing a lot of buyers from China either paying cash or with relatively small loans. 

Cash buyers obviously aren’t concerned about rising interest rates. Their investment decisions are much more about long-term security and strong returns.  

Some people are selling their properties in overseas locations and redeploying those funds in Australia. 

I expect to see international buyers increasingly active in our property market over the next few years as the world gets back to normal after COVID-19.

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

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