Well-heeled expatriates returning to Australia are helping drive the nation’s booming property market to new highs, according to the Property Investment Professionals of Australia.
Over the past year, hundreds of thousands of Australians who were living overseas have returned home, and many have come from cities with more expensive property markets.
PIPA Chairman Peter Koulizos said expats were returning in large numbers with plenty of capital to invest in the local real estate market.
“Expats from expensive cities like London, Hong Kong and New York often don’t consider our real estate prices unaffordable and are happy to pay what is necessary to secure a prestigious property in a desirable location,” Mr Koulizos said.
“Our members report that some of the sale prices being achieved in Sydney, for example, seem insane – even in booming market conditions – with new money or the expat factor the likely reason.
“Indeed, some properties are selling for hundreds of thousands of dollars more than what anyone – including experts – had predicted, which is leaving sellers very happy, but many buyers and property investment professionals scratching their heads somewhat.”
Mr Koulizos added other locations including Brisbane, Adelaide and regional areas were also securing record sale prices due to the injection of ‘new money’ from more expensive overseas and interstate locations.
According to CoreLogic’s March National Home Value Index, the premium end of the market is leading the current acceleration in the rate of capital gains.
The CoreLogic data showed that across the combined capitals, the upper quartile of the market recorded a 3.7 per cent lift in values in March.
The index found that the Sydney upper-quartile home value was 4.8 per cent higher over the month, compared with a 2.2 lift per cent in values across the lower quartile.
It was a similar story in Melbourne, where there was an upper-quartile increase of 2.8 per cent, which outpaced the lower quartile at 1.6 per cent.
Brisbane’s upper-quartile index rose by 3.1 per cent – nearly triple the rate of lower quartile values at 1.1 per cent, according to CoreLogic.
Real Estate Buyers Agents Association of Australia (REBAA) president Cate Bakos said expats were having a significant impact on Melbourne’s market but local buyers were also remaining competitive.
“Cashed-up expats are certainly contributing to some of our silly runaway prices in Victoria, but we also have a lot of bottled-up energy from local buyers, too, particularly those who have managed to save during COVID,” Ms Bakos said.
She said the low cost of finance, combined with Victorian Government incentives, had exacerbated the supply-demand imbalance, particularly in the $900,000 to $1 million price bracket.
“At the higher price points, and specifically in the family home markets, expats are represented by a reasonable share of buyers,” Ms Bakos said.
“Buyers’ agents are definitely privy to this, given expats are a cohort who typically do reach out for professional assistance, but it is fair to say that many expats are struggling to keep up with and accept the sheer pace of our market growth at present.”