The Australian property market remains a beacon for international investors, particularly from Hong Kong and mainland China, showcasing resilience in the face of interest rate hikes and soaring home prices. Despite the recent 25 basis points increase by Australia's central bank, bringing rates to a 12-year high of 4.25%, foreign buyers are actively participating in the market. Cities like Perth, Brisbane, and Adelaide are experiencing record-high prices, with some areas seeing an 11% increase over the past 12 months.
Daniel Ho, Co-founder and Group Managing Director of Juwai IQI, emphasizes that the influx of foreign buyers, especially from China, is propelled by various factors, including China's relaxed borders, a surge in foreign students, and a significant uptick in immigration. Ho notes that sales to foreign buyers have reached a five-and-a-half-year high, showing sustained growth over four consecutive quarters.
Chinese buyers, in particular, have returned to the Australian market in substantial numbers. The population growth of 2.2% to 26.5 million in the 12 months to March, driven by over 80% net overseas migration, underscores Australia's continued appeal. Despite monthly approvals for new residential units being lower this year compared to previous years, ranging between 12,338 and 15,218 units, property agents anticipate robust prices due to a shortage of approved units and increasing demand.
Peter Li, General Manager of Plus Agency, provides specific examples of foreign buyers' activities, citing a Hong Kong buyer's A$3.8 million acquisition of a Sydney four-bedroom flat and a Chinese buyer paying A$3 million for a custom-tailored duplex in a Sydney suburb. Li observes a surge in overseas buying sentiment, particularly following a 40% increase in Australian government approvals for foreign homebuyers in the third quarter compared to the previous year.
The surge in demand and transactions from foreign buyers extends beyond China, with growing interest from US and European investors, notes Li. Despite a 400% surge in foreign buyer inquiries compared to last year, transactions have increased by about 20%. Li highlights a notable trend where overseas buyers are willing to pay a premium of 20% or more for homes that offer customization options.
Looking ahead, property agents anticipate that home price trends in Australia for the coming year will be shaped by the delicate balance between supply and demand and fluctuating interest rates. Juwai IQI's Ho mentions analysts' predictions of prices rising by up to 5% in 2024, but some forecasts indicate a potential drop of up to 4%. The market's trajectory will hinge on the ongoing battle between interest rates and a housing shortage, set to unfold in the coming year.
By fLEXI tEAM