Australia Reopens

Australia’s international and interstate borders have finally reopened after two years of closures and restrictions.

How will this affect Australia’s property market, which has continued to boom so far throughout the pandemic?

Arrivals to Australia have already picked up noticeably since November, according to the latest ABS data, when restrictions were eased for fully vaccinated Australian citizens and permanent residents. Now, double-vaccinated tourists and visa holders have been welcomed back too, with special incentives for skilled visa holders to encourage them to stay in the country for longer.

The return of overseas arrivals, and subsequent demand for housing, is expected to build slowly, with different segments of the property market impacted in different ways.

Growing demand

Speaking to MPA magazine (Mortgage Professionals Australia), Adrian Kelly, the president of the Real Estate Industry of Australia (REIA), predicted that the newly opened borders could bring a surge in demand that will help fuel strong activity throughout 2022.

“It’s going to have a big impact because we’re going to see tourism reappearing and short-term accommodation, “ said Kelly. “We’re going to have overseas students back and they all need somewhere to live. We’re going to have migration starting again and they’ll all need somewhere to live - not forgetting we’ve got all those expat Australians who have been living overseas.”

The return of migrants is expected to drive stronger unit price growth, which may help close the price gap with houses in Sydney and other capital cities.

Property investment on the rise

Reece Coleman, head of buyer's agency Maker Advisory, has said he sees good news ahead for buyers and investors.

"Buyers can expect a less heated market as 2022 progresses, while investors will benefit from rising rents with the return of international migrants, students and reverse sea and tree changers, along with the emergence of new investment hotspots," Coleman told finder.com.au.

Indeed, CoreLogic data showed that lending for property purchases reached a new record high through January 2022 (at around $33.7 billion), which included a record $11 billion to investors.

Coleman also noted that other trends have included “growing demand for townhouses and inner-city apartments, and dampened activity in the renovation and new home build sector owing to rising material costs and labour shortages.”

Impact on the rental market

The rental market was particularly hard-hit by the border closures. Double-vaccinated tourists and visa holders returning will see an increase in demand for short-term accommodation, particularly in popular tourism destinations such as Sydney, Melbourne and Brisbane. The return of international students is also likely to benefit inner-city rental markets in capital cities that are close to academic hubs.

However, interest rate hikes on the horizon are also widely expected to cool market conditions this year, and the outcome of the forthcoming federal election will have an impact too.

If you need advice on buying or selling in Sydney’s inner-city or inner west, contact my team today.