Foreign investors are returning to the Australian housing market, dominating the purchase of properties in the first quarter of the year. In a new report, The NAB Residential Property Survey Q1 2023 found that in the first quarter of the year, foreign buyers comprised 7.9 per cent of sales in new housing markets, indicating a 2.7 per cent jump from the previous quarter.
According to the NAB Residential Property Survey for the first quarter of this year, first home buyers were reported to have withdrawn in the property markets, with the share of total sales “dipping to a near 6-year low” of 35.7 per cent. NAB attributed the reduction to the fall of the market share of first home buyers and owner occupiers.
Home ownership has decreased over successive generations for those aged between 25–39 years, with Baby Boomers in that age group from 1991 three times more likely than Millennials in 2021 to own their home outright.
Young Australians seeking to enter the housing market are experiencing additional rental and housing stress, with reduced economic security, a spike in the debt-to-income ratio and the ten consecutive interest hikes that the Reserve Bank of Australia (RBA) have made* since December* last year.
The housing crisis has seen housing stress among low-income-earning youth and essential workers and working Australians have been subject to the highest yearly jump in the cost-of-living, according to new data released from the Australian Bureau of Statistics.
All households saw increases in annual living costs in the March 2023 quarter. ABS head of prices statistics Michelle Marquardt, stated that the increases ranged from” 7.1 to 9.6 per cent, all higher than the 7.0 per cent annual increase in the Consumer Price Index (CPI)”. The living costs for employee households recorded the largest annual rise of all household types, at 9.6 per cent. According to the ABS, the last time the CPI recorded an annual increase at that rate was in 1986.
Essential workers hardest hit by housing unaffordability
Last month, the national housing campaign, ‘Everybody’s Home’, released their ‘Priced Out’ report comparing data on rents against the award wages for 15 essential worker categories. The ‘Priced Out’ report found that essential workers have lost an average of six hours from their weekly income to rent increases since March 2020, equating to an average of 37 days per year.
Workers that were found to be hit the hardest with housing unaffordability included those in aged care, childcare, hospitality, postal, meat packing and freight. Based on the capital city average, workers on the lowest awards would only have approximately $20 per day to spend after paying rent.
Surge in foreign investor interest on housing
The latest PropTrack Overseas Search Report identified a surge in activity on website realestate.com.au from buyers and renters based abroad. Released in January this year, the report found rent searches on the site from overseas property seekers in 2022 increased by 65 per cent, compared to 2021, and were 20 per cent higher than pre-pandemic levels (2019).
Buy searches also increased by 10 per cent compared to 2021 and 11 per cent higher than 2019 levels.
Juwai IQI co-founder Daniel Ho addressed the state of housing in Australia for Chinese homebuyers last year, stating “In January, Chinese buyer inquiries for Australian real estate surged by 24 per cent compared to December, due to the announcement that borders would be reopening”.
Foreign Investment Review Board released figures in March that found China to be the largest source of investment for residential real estate investment proposals by number in the December quarter, valued at $600 million.
According to AFR reporter, Michael Bleby, this demand is expected to increase following China’s decision to reopen its borders and the snap ban on online learning at foreign universities, forcing students to return to campuses for face-to-face teaching.
While foreign buyers are scoping out properties to purchase, Australians have continued to experience severe rental stress and housing unaffordability. The dire shortage of affordable homes has led to a 23 per cent increase in homelessness on the streets of Sydney and more than 640,000 households in Australia whose housing needs are unmet, with that figure projected to soar to 940,000 nationally by 2041.
