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The Australian Property Market Continues to Surge as Immigration Wave Fuels Price Escalation!

Source: Yeeyi

The Australian property market continues to heat up, despite the Reserve Bank of Australia's decision to raise interest rates again in November last year, failing to dampen the upward momentum of housing prices. Latest data shows that in March of this year, the average property prices in the five major capital cities of Australia rose by 0.6%, with Perth leading the way with a 1.8% increase, followed by Adelaide and Brisbane with increases of 1.1% and 1.0% respectively. By the end of the first quarter of 2024, the average property prices in the five major capital cities had risen by 1.7%. What sets this quarter apart is that the rise in property prices was mainly driven by Perth (5.5%), Adelaide (3.5%), and Brisbane (3.1%).

The strong rebound in property prices is remarkable. Since hitting bottom on January 29, 2023, property prices in the five major capital cities have risen by 11.8%, with all major capitals experiencing double-digit rebounds except for Melbourne. Since mid-2023, property prices in Perth, Adelaide, and Brisbane have begun to outpace those in Sydney and Melbourne. This phenomenon is starkly different from historical patterns. According to historical norms, with rising interest rates and declining borrowing capacity, property prices should continue to decline until interest rates are lowered. However, the current strong rebound is primarily due to the record influx of immigrants driving population growth. Over the past year, Australia has welcomed a record 765,900 new immigrants, resulting in the highest population growth in 70 years. This population growth has directly led to historically low vacancy rates for Australian homes, while the pace of new home construction has failed to keep up with demand.

Australian Bureau of Statistics data shows that as of September 2023, approximately 2098 immigrants were arriving in Australia every day, resulting in Australia's population officially surpassing the 27 million mark. This population growth has had a significant impact on Australia's housing market. New South Wales, Victoria, and Queensland have seen the highest net overseas migration numbers, with these three states also ranking among the top areas for property prices.

In the first quarter of 2024, property prices in Perth, Adelaide, and Queensland led the way, partly because property prices in these areas are relatively lower compared to Sydney and Melbourne, making them more accessible to ordinary people. This has attracted a large influx of interstate migrants, driving up local property prices.

However, against this backdrop, new buyers face significant challenges. In Sydney, for example, purchasing a property with a median price of $1.34 million AUD requires buyers to accumulate at least $246,000 AUD to cover a 10% down payment, stamp duty, and other upfront costs; a 20% down payment would require around $344,000 AUD in savings.

The continued boom in the Australian property market has also brought substantial returns to property owners. Data shows that the continuous growth in property prices resulted in an average gross profit of $310,000 AUD for Australian property owners in the last quarter of 2023, a 6.9% increase from the previous three months. The proportion of property owners profiting from selling their properties increased by 0.4 percentage points to reach 94%.

Amidst high interest rates and persistently high living costs, the fervor in the Australian property market shows no signs of abating. Faced with a supply-demand imbalance, buyers commonly exhibit a fear of missing out, with auction clearance rates remaining around 70%.

If, as expected, the Reserve Bank of Australia lowers interest rates later this year, it may further fuel the prosperity of the property market.

If you have any questions or need any information about Australian property, buying Australian property, selling property or looking for property management, you can leave a message or WhatsApp +61 481 988 806 to contact real estate expert, Entre Shield Property, we have the most professional sales consultants to answer any related questions for you!

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