Expats are fuelling Australia’s property boom, according to industry body Property Investment Professionals of Australia (PIPA).
It is thought that over 400,000 Aussie expats have come back since the pandemic began in early 2020, bringing with them cash that was earned elsewhere in the world.
PIPA Chairman Peter Koulizos told Australian Broker about the so-called ‘expat factor’.
“The expat factor is where we have a lot of people that used to live in Australia, that may have gone overseas for work, who as a result of COVID-19 have decided to return to Australia,” he said.
“For many of them, they weren't going to be working overseas forever, and COVID was a catalyst. Rather than going home later, they've said that they're coming home now.”
“For those people living in more expensive real estate markets, like London, Hong Kong and other expensive parts of Europe and Asia, who have been earning good money, they might have liquidated their assets there.”
“When they come back to Australia, it looks relatively inexpensive compared to where they had been living so they're ready to pay that little bit extra to live in very desirable areas of our capital cities.”
Koulizos said that the expats could be seen as replicating the foreign investor surge that was present in Australia a few years ago, in essence bringing foreign capital into the market, albeit this time via Australian citizens.
“It's like when we were complaining that foreign investors were driving property prices up,” he said. “Outside money, particularly high income earners, were viewing Australia as a much more affordable place to invest, so they were buying here. Then the government put in a foreigner's purchase levy and that slowed things down.”
“We've probably seen the best of it (the expat factor), because I can't see people continuing to come back to Australia as a result of COVID. Even though COVID isn't over, the worst of it certainly is. It provided a catalyst for prices moving up.”
There is a marked difference, however, between the inwards migration from abroad by Aussies and the movement of people out of the cities that has also been seen in the last year.
“There are two movements here: one is from overseas to major capital cities, the other is capital cities to regional areas,” said Koulizos. “We need to be careful here: what's happened is the movement from major capital cities to regional areas are mainly people that are renting. When the boss said that they didn't have to come into work anymore, people that were living in Brisbane didn't have to live there anymore and moved to the Sunshine Coast or the Gold Coast. If they were renting in Brisbane, they've now left that and starting renting elsewhere.”
“But generally, their leases are up after 12 months, so it'll be interesting to see if there is a slight movement back towards capital cities from regional areas. Even though rents have gone ballistic in regional areas within commuting distance, whether that continues is still to be seen, because that is a fairly temporary move. It's very much another thing to sell your home, incur all those costs and then go buy another home. That's a much more permanent move.”
