In 2023, 23% of property purchase inquiries on realestate.com.au were from buyers looking to invest in a state other than their current residence, an increase from 17% the previous year, PropTrack reported.
Anne Flaherty (pictured above), PropTrack economist, said the latest figure was up compared to 15% in 2021 and more than double the pandemic low of 11% in 2020.
South Australia emerged as the most favoured state among interstate buyers, accounting for 29% of the state’s enquiries. This was followed closely by Queensland (27%) and Western Australia (25%).
In contrast, New South Wales had the lowest share, with only 15% of enquiries coming from interstate buyers. In Victoria, 23% of property inquiries came from interstate buyers, the second-lowest level after NSW.
The surge in interest from interstate buyers can be attributed to various factors, including the potential for lower property prices, different tax incentives, and the opportunity for investors to diversify their portfolios across states.
In Greater Sydney, the median price of homes surged 31.7% between March 2020 and October 2023, with the growth in dollar value significantly higher compared to the combined capital city markets. This has prompted residents in high-priced areas, like Greater Sydney, to explore property investment opportunities in more affordable states, using the “rentvesting” strategy.
Land tax considerations also play a role in attracting investors to explore opportunities beyond their current residence.
“Because land tax is calculated based on the cumulative total of land owned in a given state, investors with more than one property have an incentive to spread their portfolio across different states,” Flaherty said.
Variations in stamp duty costs across states is another factor.
“For example, an investor looking to purchase a $600,000 established property in Victoria will cop around $33,000 in government fees, compared to around $22,000 for the same value investment in Queensland,” Flaherty said.
More investors have been selling homes than buying in the last five years, but the PropTrack economist said there are signs that might change.
“Just 1.02% of all rental properties were sitting vacant in October, while rents were up 14.6% nationally over the 12 months ending September,” Flaherty said. “What’s more, Australia’s current shortage of homes looks on track to worsen, with development activity slowing at the same time population growth is surging.
“Many investors realise this is likely to drive property prices higher, regardless of where interest rates sit.”
Click here to read the PropTrack article.
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