The Growing Allure of Australian Real Estate: A Global Safe Haven

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Australia’s real estate market is experiencing an unprecedented surge, drawing global attention due to its safety, stability, and growth, amidst a world filled with uncertainties. According to Al Gerard de la Cruz in his piece, “Why everyone wants a piece of Australia’s hot real estate market,” the nation has seen an impressive demographic shift, which, coupled with a chronic housing shortage, has escalated home values and interest among international buyers, particularly from Asia.

Population growth has been a significant driver of this demand. Last year, the proportion of overseas-born residents exceeded 30% for the first time since 1893, boosting home values by 8.1% nationally as reported by CoreLogic. The appeal is evident in the queues that snake around open houses, a scene commonly shared across social media platforms.

Real estate experts highlight the robust participation of foreign investors in shaping the market’s dynamics. “Asian buyers are a driving force for a lot of demand for homes still,” notes Peter Li, general manager of Sydney-based real estate firm Plus Agency. “In Asian buyers’ minds, they don’t just want to rent—they want to own the home.”

The interest is not just from typical families but also affluent individuals seeking a secure investment. “I genuinely believe Australia is now the top destination globally,” states Benson Zhou, state head for Asia markets at Savills Australia. “We are not anywhere close to all the war areas. There are just loads of wealthy people looking at Australia as a safety net.”

However, this influx has also created challenges. While property values soar, the transaction volume has lagged, indicating a market dominated by upgraders and those financially robust enough to withstand high interest rates and additional fees. This scenario is squeezing out first-time homebuyers and low-income migrants, facing an affordability crisis with rents consuming a record portion of income, according to a joint report by CoreLogic and ANZ bank.

In response, the Albanese government plans to temper demand by cutting net migration and boosting housing supply through initiatives like the National Housing Accord, which aims to build 1.2 million homes over the next five years.

As Australia navigates this complex landscape, its government’s adept handling of migration policies plays a crucial role. “If something didn’t work, they just keep the migrants’ tap up,” observes Zhou. This pragmatic approach may continue to bolster Australia’s position as a preferred destination for both living and investment amidst global volatility.

References:

https://www.asiapropertyawards.com/en/race-for-the-prize/