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Areas where homebuyer demand is set to surge on the back of a ‘perfect storm’ of market factors

By Mo Zeitouneh

Several significant market factors are shaping up as potential property price drivers in parts of Australia, which experts say may see them dodge cooling trends.

Increased immigration, the return of international students, continuing interstate migration, and a first-home buyer preference for apartments are tipped to lead some suburbs outperform others in the next few years.

Property experts have pinpointed Queensland’s southeast, inner-city apartment markets in Sydney and Melbourne, ‘sister cities’ like Geelong and Wollongong, and greenfield developments in outer metropolitan suburbs as those most likely to grow.

“We’re expecting property prices to [cool] in the immediate future – interest rate rises, and cost-of-living are the biggest factors affecting affordability,” said social researcher Geoff Brailey, from McCrindle Research.

“But it will be fascinating to see how population growth plays out against that.”

Migrants seeking the Aussie dream

The past few years has seen a sharp decline in immigration due to Covid border closures and an exodus of international students.

But the new Labor Government has announced it’s actively seeking to raise the level of skilled immigration, with a forecast target of between 180,000 to 200,000 new arrivals per year, to counter worker shortfalls in key areas like health, trades, manufacturing, and tech.

Migration is tipped to significantly increase as the government seeks to combat a skills crisis. Picture: Getty

“People who come with greater skills also sometimes tend to come with more ability to purchase a home,” said Martin North of Digital Finance Analytics.

“Some of those people do think about buying quite quickly, and they tend to gravitate towards off-the-plan or new developments in outer suburbs.

“The majority of people coming from overseas are looking at big houses, substantial houses with lots of land.”

Mr Brailey said many migrants would be looking for affordability in family-friendly areas with good schools in the middle rings and outer suburbs of our major cities.

“Having a prestigious property with a big backyard is not just a traditional Australian dream, it’s a global dream to have that aspirational lifestyle,” he said.

“People want to have that quality lifestyle. They might start in an apartment for the first couple of years, but then look for that prestigious property.”

An inner-city battle looms

As well as an increase in the intake of skilled migrants, the opening of borders has seen a surge in interest from international university students, with 10,000 student visa applications being lodged each week since June, according to the Home Affairs Department.

The international student market is also rebounding strongly, with some 10,000 visa applications a week being received. Picture: Getty

While the incoming students are likely to put more pressure on already-tight rental markets in and around capital city campuses, more affluent families may take the opportunity to invest in local real estate.

“It’s more about the apartment narrative where the student option is one- or two-bedroom apartments in the capital cities,” Mr Brailey said.

“Global investors can get a good tenant in the form of their own children and then benefit over the long-term.”

And that may lead to investors in the inner-city apartment market competing against a forecast rise in first-home buyer numbers, according to Mr North.

“Those first-home buyers are saying: ‘I’m not going to get a house in the suburbs, I should just try to find an apartment close to transport and reduce costs.’

“That may put greater demand on apartments close to the city because of access to amenities and commuting benefits.

“Some of those will be in the same areas where foreign students are looking for accommodation.”

Sydney and Melbourne’s inner-city unit markets look set to perform well. Picture: Getty

Big city life losing its appeal

The sprawling population corridor between the Gold Coast, Brisbane and the Sunshine Coast in Queensland has already benefitted from pandemic migration from New South Wales and Victoria.

That popularity is set to continue, as buyers favour affordability, lifestyle, and space.

Combined with international migration, an extra 1.5 million people are expecting to call Southeast Queensland home by 2041, according to the State Government.

PropTrack economist Angus Moore said the ability for people to work away from CBD offices, as demonstrated during pandemic lockdowns, had added to the attractiveness of areas like the Sunshine State.

“We did see a switch towards Southeast Queensland and away from Sydney and Melbourne, and more surprising is that some of that is permanent,” Mr Moore noted.

“For some people, living in a different area is possible in a way that it wasn’t two or three years ago and affordability in those pockets means they can live in a larger dwelling than they might have been able to afford in Sydney or Melbourne.”

Queensland has been inundated with new residents over the past few years – particularly the Gold Coast and Sunshine Coast. Picture: Getty

Other areas outside of the major cities are also expected to benefit from ongoing population shifts.

“I think a lot of people have re-evaluated their lifestyle post-Covid,” Mr Brailey said.

“We’re looking for a simpler, more family-friendly way of life. The hustle and bustle of city life has fallen down a peg or two in people’s priorities.

“There are so many parcels of paradise around our country, not just coastal, but rural as well, with great communities, great jobs, and essential services.”

Sister cities are also growing in appeal for buyers seeking lifestyle and affordability. Picture: Getty

Sister cities like Wollongong and Geelong offer this type of scenario, where people can live the best of both worlds, he said.

“It’s not Wollongong or Geelong, but also the areas around them. In Sydney, it’s going to be the Shoalhaven and areas through to Bowral inland. Or even north to Port Macquarie.”

In Melbourne, regional towns like Kyneton that are still relatively commutable also offer appeal to those seeking a slower pace of life.

“In Adelaide, it’s McClaren Vale and the Adelaide Hills, areas that have incredible lifestyle opportunities plus good schools and services,” Mr Brailey said.

source: rea.com.au

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