Today, 1 in 4 Australian residents hail from overseas making us one of the most culturally diverse countries in the world.
I’ve often said that demographics – how many of us there are, how we want to live and where we want to live – will be the biggest driving force of our property markets over the years.
In 2016, 83% of overseas born residents lived in a capital city.
Sydney had the largest immigrant population (1,773,496 people) followed by Melbourne (1,520,253 people).
In his recent McGrath Report, John McGrath explains the how he sees this massive wave of immigration affecting our property markets.
He tells his readers:
Immigration to Australia has now hit a peak not seen since the late 1800s, with the percentage of Australian residents born overseas increasing every year for the past 16 years*.
About 1.3 million new immigrants moved here between 2011 and 2016, according to the latest Census.
Today, one in four (26%) Australian residents hail from overseas, making us one of the most culturally diverse countries in the world.
By comparison, we have more immigrants than the UK (13%), US (14%), Canada (22%) and New Zealand (23%).
With so many people crossing borders into Australia, what does this do to our property market?
The simple answer is it raises demand.
Most immigrants settle in Sydney and Melbourne and this has been a key factor driving property prices during the boom.
Immigration keeps rising too, with about a 20% jump in net overseas populations in both NSW and Victoria in CY2016 alone.
Sydney has the largest immigrant population of all the capital cities and attracts the highest number of high net worth international buyers.
Overseas purchasers have become increasingly important in the harbour city where locals consider home prices expensive but some overseas buyers see greater value.
Great Britain and New Zealand have long been our source countries for immigrants but change is afoot with a rising middle class in Asia resulting in more Chinese, in particular, aspiring to an Australian lifestyle with our strong economy, clean air, pristine beaches and superior schools.
Today, 40% of our immigrant residents were born in Asia – up from 33% in 2011 and 24% in 2001.
The dominant source countries are China and India.
These two enormous growing economies already make up 37% of the world’s population and their close proximity to us means we can expect them to be a major force in our property market for decades to come.
Immigrants can affect our market in different ways.
For example, Chinese buyers have a strong preference for certain suburban locations and property types.
New Chinese immigrants tend to buy in suburbs with established Asian communities.
Families are choosing new or renovated properties and young people are choosing apartments and townhouses close to shops, transport and universities.
Wealthy Chinese families are very active in the high end suburbs of Sydney and Melbourne and prioritise homes within the catchment zones of top public schools or close to private schools.
An elevated position, good feng shui and water views are highly prized and if there is an 8 in the address or sale price, it is considered good fortune.
Desirable suburbs for Chinese prestige buyers in Sydney include Mosman, Hunters Hill, Point Piper and Vaucluse; while in Melbourne they are targeting Toorak, Malvern, Balwyn and Kew.
What if we pull away the Welcome Mat?
When it comes to national population growth, net overseas immigration plays a bigger role than natural increase (births minus deaths).
So, what happens to our property market if we take down the welcome sign to immigration and international investment in real estate?
There are already indications that new fees and processing charges are dissuading foreigners.
The latest Foreign Investment Review Board Annual Report notes that the introduction of these fees, among other factors, contributed to a decrease in the number of approvals for purchases of established homes in FY16, down 36% compared with the previous year.
Read more at: McGrath Report
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