Buyers v borders: Australia’s property dilemma

Interest in Australian property is still emanating from offshore as expats look to return but the extended closure of international borders may start to cause purchasers to look elsewhere.

Peter Kettle and Anabel Gomez at their house in Cottesloe.... they’re heading back to London. Picture: Colin Murty

Interest in Australian property is still emanating from offshore as expats look to return but the extended closure of international borders may start to cause purchasers to look elsewhere.

Despite the federal government’s projection that borders will reopen in 2022, data from realestate.com.au has shown the number of searches for homes to buy is up 3.6 per cent over the years, while rental search is up 2.8 per cent.

An increase in search, however, is not necessarily reflective of actual sales. REA Group executive director of research Cameron Kusher notes the prolonged border closures may slow and disincentivise future investment.

“I think there would be quite a reluctance for foreign investment in Australia at the moment, just because there’s uncertainty about when those borders are going to open again,” Mr Kusher said.

“If you look at Europe ... the US, Canada, they're all opening up again. With our elongated border closures, we run the risk of missing out on investment from overseas and we might not get it ... back to the levels we previously saw because people will make the decision to go somewhere else.”

Sydney-based buyers agent Michael Cleary finds it hard to believe there won’t be a spike in foreign purchasing once borders reopen in light of the current demand. The co-founder of agency Milk Chocolate said shortly after the initial lockdowns last year, there was a surge of inquiry from overseas Australians looking to return home that has yet to wane.

“Australia is still seen as ... a safe investment despite this current wave (of the virus),” he said.

Ray White chief economist Nerida Conisbee said it is evident ease of access to Australia is a factor. The realestate.com.au data showed searches of New Zealand outpace any other country, with inquiry surging 35 per cent since the border bubble was opened.

Australian property prices have risen 13.5 per cent in the past year but that does not hold a candle to the 22.8 per cent in New Zealand, according to CoreLogic figures, largely in main urban areas, with the capital, Wellington, up 30.8 per cent in the year to June. In contrast, UK and US search numbers have fallen 26 per cent and 13 per cent respectively.

It was an easy choice for Peter Kettle and Anabel Gomez to return to London from Perth in October following the first wave of the virus. They suggest while people may move to Australia, many will also be moving the other way.

“The rest of the world is beginning to open up, so there’s probably less demand to come here because it's difficult and Australia is also on a slow path to vaccination so there is less reason to come here,” Mr Kettle said.