Migration expected underpin new home sales in Australia

Brisbane’s Queens Wharf Development has a high number of Chinese buyers who committed to purchases when borders were shut. Picture: NCA NewsWire / Sarah Marshall

Developers are banking on a new wave of interest from international buyers over the next few years as borders reopen.

The last two years of strong growth in the new home sector have been driven by pandemic stimulatory measures such as HomeBuilder and a property boom.

But as the number of domestic buyers in the market begins to wane as their demand is met, developers have already started to see international buyers – particularly from China and Hong Kong – begin to inquire and make purchases.

The managing director of developer Cedar Woods, Nathan Blackburne, said 14 per cent of inquiry last month came from overseas, with interest from Britain, NZ, Malaysia, China and Hong Kong.

“Pent-up demand from overseas buyers who wanted to come here and work or study is coming through following the lifting of restrictions,” Mr Blackburne said.

“By June, we expect the data to show a strong upswing in overseas buyer numbers.”

As international border restrictions ease, the federal government’s Centre for Population expects net overseas migration to recover strongly and return to pre-pandemic trends by 2024-25, should the Covid-19 situation remain stable.

However, the true impact of migration is unlikely to be seen for several years, according to Housing Industry Association senior economist Nicholas Ward.

“Recent migrants typically access the rental market, predominantly apartments,” Mr Ward said.

“Typically,(they) will enter the detached market some years later – likely past the five-year point.”

Cedar Woods managing director Nathan Blackburne expects a strong recovery in offshore buyer numbers. Picture: Brad Fleet

Given the two years of border closures gave overseas buyers a greater opportunity to research, and the shortage of rental stock around the country, Mr Blackburne said the timeline to purchase might be shorter in the coming years.

Mirvac head of residential Stuart Penklis said the number of offshore purchasers had picked up since February, with many inquiries coming through for larger, off-the-plan apartments which they hope to secure before emigrating at a later date.

It is different to purchases between 2013 and 2018, when one and two-bedroom apartments were favoured for investment purposes.

“The shift towards living in these high amenity locations in larger apartments has occurred,” Mr Penklis said.

“Buyers are after larger apartments; they’re after the three and four-bedroom apartments and as a business, we’ve never done more amalgamations than what we’ve done in the last 12 months.”

But new risks have begun to emerge. A chronic under-supply in apartment stock down the east coast has been flagged by both the industry and housing affordability advocates. As the delivery of housing hit record levels last year, the number of apartment starts and completions have fallen to very low levels.

Mr Penklis said for the first time in three years, rental vacancy levels within Mirvac managed complexes were at nil.

The tight vacancy rate was only set to worsen as migration rises.

On the other side of the coin are problems faced by builders. While developers can still release and sell land, home builders are working through full pipelines of work and facing increasing supply and labour costs. However, Mr Ward said there were signs of improvement starting to emerge.