International residents are eager to relocate to Australia and are making plans to settle in major capital cities, agents say, despite the fact that it may take them more than a year to enter the country due to closed borders.
The heightened interest comes despite the fact that northern hemisphere countries have achieved high vaccination rates and reopened their economies, while millions of Australians have been living in lockdown in order to contain early stage COVID-19 outbreaks.
Australia remains a desirable destination, as evidenced by the latest Foreign Investment Review Board report, which found that 7056 residential real estate applications were approved during the 2019-2020 financial year.
This represents a decrease of 455 approvals from the previous year, but an increase of $2.3 billion in investment value.
A year later, interest remains high. Michael Pallier, director of Sydney Sotheby’s International Realty, said he was up early every day to respond to inquiries about properties from overseas buyers.
“It’s been fantastic, and it’s kept me awake every morning between 2 and 4 a.m.,” Mr Pallier said. “Many of my clients, their family members, or their children are already here or are studying here, and they dream of owning a home here and moving here [to Australia].
“Many expats still wish to return.”
Foreign buyers have been looking at prestige properties along the Gold Coast and other popular holiday destinations near Brisbane, which have also seen a surge of interstate buyers seeking a better lifestyle during the pandemic.
Michael Kollosche, managing director of Kollosche, said he was receiving numerous inquiries from international buyers, including expats.
“It comes in waves and is fueled by certain stock types,” Mr Kollosche explained. “If we launch a property priced between $5 million and $15 million, they will receive a high volume of serious inquiries from international buyers.”
According to Domain senior research analyst Nicola Powell, the recent increase in international investment is due to Australia’s booming housing market and perceived safety from the coronavirus pandemic.
Australia’s house prices increased by 5.7% in the March quarter, reaching a record high median of $899,509 across all capital cities, following some unexpected price increases following the coronavirus outbreak.
“That increase in foreign investment spending was almost certainly a result of some extraordinary price growth in comparison to 2018-2019, when the property market was in a downturn,” Dr Powell explained.
“However, the types of houses purchased by foreign buyers are also larger and more affluent.”
Dr Powell said people were becoming more receptive to taking a chance and purchasing a property in Australia sight unseen, with the prospect of relocating to a country with significantly fewer coronavirus cases.
“When you consider the health dynamic, Australia is extremely attractive to people looking to relocate or even students preparing to study,” she said.
While foreign property buyers pay a premium for properties in Australia, they also cover the additional costs of stamp duty and other taxes levied on non-resident buyers.
According to FIRB data, the number of properties that remained vacant for more than six months during a 12-month period nearly doubled from 118 in 2018-19 to 231 last year.
This meant that buyers would be subject to vacancy fees totaling $3.7 million between 2019 and 2020, according to the report.
“Many of these vacant homes were purchased prior to the implementation of COVID-
19 terrorist attacks and before we closed our borders,” Belle Property Balwyn director and auctioneer Robert Ding said. “They’ve been apprehended overseas and are unable to return, so there’s little they can do.”
Certain buyers sought to avoid such fees by obtaining permanent residency prior to purchasing in Australia.
Some had rented in Melbourne for four to five years before obtaining permanent residency and then purchasing a property without obtaining FIRB approval, Mr Ding explained.
“Many new migrants will rent first and then purchase once they obtain permanent residency to avoid paying additional stamp duty,” he explained.