Surge in International Interest in Victorian Homes Amidst Australia’s Housing Shortage - Property Inc

Surge in International Interest in Victorian Homes Amidst Australia’s Housing Shortage

The Australian real estate market, particularly in Victoria, is witnessing a significant surge in interest from international buyers, with New Zealanders leading the pack. This trend, highlighted by Sarah Petty in her article “International buyers flock to Victorian home listings with New Zealand at the top of the pecking order,” is occurring alongside a deepening housing shortage across Australia, as analyzed by Michael Yardney in “Australia’s housing shortfall: a perfect storm driving prices higher in 2024.”

PropTrack data indicates a 13% increase in international property searches in Victoria compared to last year, with New Zealanders accounting for the most significant portion. China also shows a notable 39% increase in buyers looking at Victorian properties on realestate.com.au. As Petty reports, “But with foreign investment from China in Aussie homes surging $1bn in the past financial year, a 39 per cent increase in buyers from Beijing and beyond eyeing Victorian properties on realestate.com.au could be a sign of more to come in 2024.”

Karen Dellow, an economist at PropTrack, suggests that this trend is likely to persist, aligning with the arrival of students and migrant workers. The suburbs of Melbourne, South Yarra, Carlton, Richmond, and St Kilda are particularly popular among international buyers.

On the other hand, Yardney’s analysis presents a dire picture of Australia’s housing market, plagued by chronic undersupply and a construction industry crisis. He states, “The Australian property market is facing a significant challenge – a rapidly increasing housing shortage not just for 2024, but also for several years to come.”

The federal government’s plan to build 1.2 million new dwellings in the next five years might not suffice, considering the sharp decline in high-rise apartment construction and rising material costs. These factors, compounded by a shortage of skilled tradespeople, are causing dwelling approvals to plummet despite the population surge.

Nerida Conisbee, Chief Economist at Ray White, points out the limitations foreign investors face, primarily due to restrictions on buying new properties and China’s strict capital control laws. Despite these hurdles, foreign investment in Australian residential property remains significant, though not expected to reach the heights of the last decade.

Jade Costello, co-founder of Rental Search Australia, highlights the diverse preferences of international buyers. While Asian migrants lean towards smaller properties, those from the UK often dream of homes with swimming pools, and New Zealanders seek the Australian lifestyle with a focus on outdoor spaces.

In conclusion, the convergence of high international interest in Victorian homes and Australia’s widening housing shortfall paints a complex picture for the real estate market. As Yardney puts it, “property investors who take advantage of the current market situation will look back in a few years’ time wondering how they bought their properties so cheaply.” This scenario indicates both opportunities and challenges ahead for buyers, sellers, and investors in the Australian property market.

References:

https://www.realestate.com.au/news/international-buyers-flock-online-to-check-out-vic-homes-with-kiwis-at-the-top-of-the-pecking-order/ 

https://propertyupdate.com.au/australias-housing-shortfall-a-perfect-storm-driving-prices-higher-in-2024/ 

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