How Has The Border Reopening Affected The Eastern Suburbs’ Property Market?
Much has been made of the predicted impact of Australia’s borders reopening on the property market.
Now that we’re welcoming overseas visitors once again, we are seeing it play out in Sydney’s eastern suburbs – but perhaps not in the ways you might imagine.
The reopening of Australia’s international borders is affecting the eastern suburbs property market in ways that you might not expect.
Rental market the first to feel the impact of open borders
Since late February, Australia’s borders have been open for double-vaccinated tourists and visa holders, and it’s the rental market where the impact is being most acutely felt.
Pre-COVID data from the ABS shows that overseas migrants settle predominantly across ten areas in Sydney and Melbourne. The eastern suburbs is the tenth most popular region on the list. According to CoreLogic, the rental markets in these ten areas experienced a sharp decline beginning in March 2020, when Australia’s international borders first closed, but they have been recovering since January 2021.
Of the five rental markets in Sydney favoured by overseas migrants, the eastern suburbs have experienced the strongest recovery, and by January 2022, our rent values were 5.4% above March 2020 figures. There are several reasons for this, including an increased domestic rental demand driven by rising property prices, a decline in rental listings (advertised eastern suburbs rental properties in January 2022 were down 15% on January 2020 figures) and a recent increase in temporary visa holders, such as international students. With arrivals timed to coincide with the February / March start of the university year, student visa entrants have been high in recent months, driving rental demand in areas like the eastern suburbs. Property investors will no doubt be taking note of the opportunity present in the eastern suburbs, with its lack of rental stock and returning rental demand, as they plan their next investment.
What about the sales market?
Because overseas migrants tend to rent before they buy, opening our borders hasn’t resulted in an immediate rush of foreign arrivals snapping up Sydney homes. But it has impacted the sales market in several interesting ways.
The return of ex-pats and foreign buyers
COVID, international political uncertainty, and the strength of our local property market are all amongst the factors prompting ex-pats and foreign buyers’ interest in Australian property. Throughout the pandemic, these buyers have been active in the eastern suburbs’ property market. While some navigated border restrictions to view property in person before buying, we’ve also sold many properties sight unseen to international purchasers over the last two years. Even so, experts are predicting that the overall bounce back of foreign buyer demand now that our borders are open will be slow for various reasons. These include ongoing quarantine restrictions in some countries, changes to Foreign Investment Review Board rules and additional state government taxes. Of course, ex-pats are exempt from some of these issues, and many are keen to secure property on home soil whether they’re planning on moving home soon or not.
Prestige Sydney suburbs are still attracting a high share of interest from overseas buyers. Several eastern suburbs feature in the top 10 most sought-after areas by foreign buyers between January 2021 and February 2022, according to data from Domain. Bellevue Hill came in at number seven on the NSW list, followed by Paddington at number eight and Darlinghurst in the tenth position. These blue-chip locations are prized for their proximity to the city, the surf and sought-after schools, with interest in affluent suburbs like ours being driven by ex-pats and highly-skilled migrants, according to CommSec senior economist Ryan Felsman.
Domain reports that buyers from Hong Kong and the United States conducted most foreign property searches on their site between January 2021 and February 2022, with China, Singapore, New Zealand and Canada also featuring in the top ten.
Australians are travelling too
Now that our borders are open, it doesn’t just mean visitors are returning to Australia. It means Australians are starting to travel internationally and domestically once again too. Many retirees, for example, whose travel plans were put on ice when the pandemic hit, are reviving their plans and packing their bags. We’re seeing a local wave of downsizing, where people are selling their larger homes in favour of smaller, more manageable and travel-friendly apartments, units and townhouses. The market is on their side in such a move, with apartments offering excellent value thanks to the greater-than-ever gap between houses and units. The beauty of downsizing for these vendors and buyers is the ability to maintain a Sydney pad and a foothold in the Sydney property market, but one they can easily lock up and leave whenever the travel bug bites.
Are you looking to buy, sell or invest in Sydney’s eastern suburbs? Contact my team today.