European homebuyers outperform China in Australia’s property market

New data has revealed the top seven countries vying for Australia’s affluent property market, with international homeowners from one continent unexpectedly taking out the top spot.

When it comes to foreign buyers investing in the private real estate sector Down Under, commonly Chinese, Indian and Singaporean investors come to mind.

In fact, several polls conducted in the past highlight that Australians believe the Government is “allowing too much investment from China”, and buyers with an Asian background are driving up property prices.

However, research collated by global property insight platform Knight Frank has revealed that while investors from China and Singapore form part of Australia’s foreign buyers market, the country with the largest number of homebuyers purchasing Australian properties priced over $US2 million ($A3 million) is in a different continent altogether.

According to The Wealth Report 2023, the UK has the highest number of residents who own a multimillion dollar property in Australia, followed by the US.

While the report doesn’t specify the exact number of residents who have invested in the Australian property market from these two countries, market data from realestate.com.au shows search interest for Australian properties on its site has increased by 30 per cent collectively.

Nadine Goldfoot, managing partner at immigration legal group Fragomen in the UK, told Knight Frank the Covid-19 pandemic was a leading factor for Europeans who decided to relocate to Australia.

“The number of people who were suddenly able to do their existing work in a new country expanded rapidly,” she said.

“The ‘digital nomad’ boom has brought many more people into the ambit of global mobility – and countries have responded by finding new ways to attract them.”

Knight Frank’s Alasdair Pritchard also said that volatility and unpredictability in the UK and Europe’s property market drove people there to invest overseas.

“Wealthy individuals living in unstable regions have always sought a ‘Plan B’ – homes in the US, Australia or Europe that can enable the transition to a new life if needed,” he said.

“But rising geopolitical turmoil has drawn more buyers off the fence, and we expect that to continue through 2023.”

According to PropTrack’s 2022 Overseas Search Report wrap up, Melbourne was the most sought after spot for UK buyers, followed by Sydney, Perth and the Gold Coast.

There was also particular interest in Queensland’s greater Brisbane region, which consists of the entire coastal plain and includes the local government areas of Brisbane City, Ipswich, Logan City, Moreton Bay and Redland City.

While not all these are multimillion-dollar properties, it shows less wealthy Europeans are considering relocating to Australia.

The results are almost identical for investors coming to Australia from the US, with Sydney taking out the top spot followed by Melbourne, Gold Coast, greater Brisbane and Perth.

The PropTrack data also revealed a large interest in the rental market from Europeans, with searches for rental properties incurring a year-on-year increase of 34.2 per cent.

Across the globe, a large portion of foreign buyers purchasing properties valued over $US2 million ($A3 million) in the Switzerland, Spain, Portugal, Italy and South Africa markets were from the UK.

Meanwhile Australia’s foreign buyer market is also composed of residents from Spain, Canada and Hong Kong, with these three nations rounding out the Knight Frank’s buying patterns list for Australia.

Looking back at foreign buyer patterns in Australia, third and fourth places in Knight Frank’s analysis went to Singapore and the Chinese mainland respectively.

Senior director and head of residential and private office at Knight Frank in Singapore, Nicholas Keong, said Australia’s proximity to Singapore and Asian nations makes it appealing to foreign buyers living in such countries.

“Outbound capital has always been very UK-centric, and that will continue to be the case through 2023,” he said.

“[But] the US and Australia are also significant draws – Perth is just five hours away, Melbourne and Sydney around eight. They all have the education, weather and lifestyle to attract more investment.”

Chinese property-seekers are largely interested in purchasing a home in Melbourne, according to PropTrack data, followed by Sydney, Adelaide, Box Hill (Victoria) and Brisbane.

However looking into the future, Knight Frank’s Attitudes Survey reveals 86 per cent of ultra-high-net-worth individuals (UHNWI) – someone with a net worth of $US30 million ($A45 million) – from Malaysia are looking to purchase a home in Australia soon.

This is followed by 36 per cent of UHNWI’s from Singapore and 34 per cent from the Chinese mainland.

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The number of Australian properties purchased by foreign investors jumped by 2.7 per cent. Picture David Clark

“Investors across Asia were initially slow to return to Australia’s prestige residential market since the borders reopened, but inquiry from these buyers has intensified in the second quarter of 2023,” Knight Frank Asia-Pacific head of residential Victoria Garrett told news.com.au.

“Value matters and understanding global property ownership is key to anticipating future investment trends. Many are now doing their research and due diligence in preparation for the holidays they have planned in the Australian spring and summer months.”

The survey results come as 25 per cent of Chinese mainland UHNWI’s revealed they plan to apply for a second citizenship or passport, suggesting they’re looking to migrate to where they’re buying.

An additional 22 per cent of UHNWI’s from Hong Kong also plan to apply for a second passport or citizenship along with 18 per cent of wealthy Indians.

“In more affordable markets domestic buyers tend to dominate, while in more expensive markets the importance of international investment rises. Property pricing is key in terms of the international mix,” Ms Garrett said.

Knight Frank’s analysis comes just a month after National Australian Bank (NAB) released its results for its first residential property survey for 2023.

The nation’s housing market has experienced a 2.7 per cent jump in the number of new properties being purchased by international buyers in the first quarter of this year.

Consequently, the market share for this category now sits at 7.9 per cent despite a two-year low of 4 per cent in Victoria.

Article source: Queensland Property Investor