An influx of wealthy overseas buyers drawn to Australia’s outdoor lifestyle, top-notch facilities and healthy economy is expected to buoy the luxury property market in 2022.
By KIRSTEN CRAZE
LUXURY AUSTRALIAN REAL estate looks set to buck the national trend of resting on price growth, as international buyer demand is expected to ramp up as we head into spring.
Although conservative commentators predict overall dwelling prices are due for a correction in the wake of a post-pandemic property boom, the top end of the market is showing signs of buoyancy brought on by low supply and an increasing desire to live in “the lucky country”. An influx of offshore purchasers is anticipated before the end of the year, opening a window of opportunity before prices rise again.
“We believe there will be a tidal wave of immigration to Australia, especially on the eastern seaboard. From August onwards, we expect demand to step right up as restrictions are lifting overseas and people feel more at ease to travel,” says Ross Savas, managing director of Kay & Burton Real Estate. “Australia handled the pandemic exceptionally well and we seem to be economically stronger than most other nations. People want to live here. They want amenities, good hospitals, great schools, open spaces, beaches and the countryside — we have it all. And at the end of the day, we offer incredible value for money on a global scale.”
Alan Oster, group chief economist at National Australia Bank, says after 22% growth in domestic average home prices last year, his team is predicting a national 10% correction. He agrees, however, that the premium end of the market often paves its own path. “The top end of town obviously represents the people with a lot of money in Australia, so, yes, you might get a different response to what you would get at the bottom end.”
Oster believes Australia is in a good economic position on the global stage. “We haven’t had the damage that some other economies have had from the pandemic, or the unemployment problems some others have had. Also, we’re not expecting rates to increase as aggressively here as they are offshore. We do see the Australian economy accelerating quite well in the medium term.”
With those solid foundations, he says it is only logical that international buyers view our property market favourably. “We’re seeing more interest offshore in Australian real estate than we have for a while. But you need to put it into context with the local market as a whole.”
Interest in Australian homes is widespread, according to realestate.com.au’s PropTrack Overseas Search Report. Combined searches from offshore househunters looking to buy and rent increased by 21% in the quarter to April 2022. The top countries where overseas browsers were located were the United Kingdom, New Zealand, the United States, Hong Kong, Singapore and China. The report also revealed buyer and renter interest is growing in India, Taiwan, Vietnam, Indonesia and the Philippines — all recording double-digit quarterly growth in searches on realestate.com.au. According to domain.com.au, the top 10 Victorian suburbs searched by overseas buyers in May 2022 were the Melbourne CBD, South Yarra, Toorak, Southbank, West Melbourne, Richmond, Kew, South Melbourne, Hawthorn and Carlton. The Wealth Report 2022 from Knight Frank also supports the theory that the wealthiest eyes are on Australia’s coveted real estate.
Australia is third on the list of countries (just behind the United States and the United Kingdom) where global ultra-high-net-worth individuals plan to buy property in 2022.
Michelle Ciesielski, head of residential research at Knight Frank Australia, says deep-pocketed buyers show no signs of kerbing their enthusiasm. “In 2022, we will see the luxury housing boom endure, with more cross-border transactions as conditions return closer to pre-pandemic levels, and we are likely to continue to see demand for our cities grow,” she commented. “The top trends for the luxury property market in 2022 will be: persistent stock shortages in prime markets; ramped-up taxes and cooling measures; and the further detachment of the super prime market of properties US$10 million-plus (AU$14.5 million).”
Kay & Burton’s Ross Savas says international interest has been so strong that Kay & Burton Concierge would expand services to include a dedicated specialist assisting new arrivals with everything from shipping to short-term accommodation and school enrolment.
“We’re predicting Melbourne will get more than 50% of people coming to Australia, and Sydney and Brisbane will also benefit. Melbourne has been voted one of the world’s most liveable cities for many years, and people love its multicultural nature. It has great amenities and offers better value for money than some other places.”
Jamie Mi, head of the international division at Kay & Burton, says the sweet spot for international buyers looking to buy in Melbourne is between $5 million and $15 million. “You only have to look at people who have been living in apartments overseas, they now want beautiful homes and more space. If you’re in Hong Kong, for example, a two-bedroom apartment in a decent location would cost at least $AU5 million. For that price, however, you can buy a spacious Melbourne property.”
After consulting with numerous overseas clients, Mi anticipates the influx could come as soon as the Northern Hemisphere’s summer finishes and their school year begins, around September.
“Now is your small window of opportunity to buy well,” she says. “Soon after the tidal wave, that sweet spot will become $15 million to $25 million. If you wait until the wave comes, prices will start to rise very quickly.