As Australia moves into a new era of living with COVID-19, the question on many lips is this: how will international travel affect our national property market?
With a change in strategy from elimination to suppression, lifting vaccination rates and state lines reopening just in time for Christmas, it’s no secret that Australia is sailing into uncharted waters. While less restrictions for domestic travel is broadly regarded as a good thing, attempts made by New South Wales, the Australian Capital Territory and Victoria to reopen to selected international arrivals have left many feeling less optimistic, particularly in regards to how the changes will affect our property market.
On a national scale, home values are currently up roughly 20% when compared to the same period just twelve short months ago. Considering the change in spending habits, shortage of building materials and just about everyone in the nation reevaluating the quality of their lifestyle, there’s simply not enough supply to meet the demand. While this has put many sellers in an enviable position, skyrocketing house prices are not expected to simmer down until interest rates are raised, and inflation and wage growth stabilises. As an extra variable to contend with, the prospect of opening our international borders will also have a part to play in the not so distant future.
How Travel Will Influence The Property Market
To understand how restrictions on both domestic and international travel have affected our national property market, all one needs to do is look at the numbers. While prices have generally boomed in a wide variety of regions, particularly for standalone dwellings, inner city hubs such as Melbourne and Sydney haven’t fared so well – but why is that?
The answer is complex, but can be simplified to two factors: little to no tourists, and a significant drop in international students. These two groups are traditionally known for filling up inner city apartments via student accommodation and short term rentals that utilise platforms such as Airbnb and Stayz. For landlords unwilling to part with their investment property, the only alternative to supplement their absence is to turn to offering the dwelling as a standard long term rental. While the rest of the country suffers through significant rental shortages, Melbourne and Sydney have found themselves with an abundance of flats, apartments and units, meaning that prices have dropped to accommodate the increased competition. A third group to be considered to contribute to the rise in property vacancies is with the hospitality workers. With bars, restaurants, hotels and cafes closed, these workers moved out of inner Melbourne and back home to rural Victoria as there was no longer a means to keep them in the inner city.
One of the ways that a property is valued is based on the rental income it can generate. If rental vacancies rise, as we’ve seen in Melbourne thanks to the lack of tourists and international students, the property won’t be earning an income. As such, owners have to lower the rent to attract a tenant. When rents rise, it’s a good sign of a healthy property market, which is predicted to be the case when international visitors are once again allowed to return.
However, it’s unlikely to have as much of an effect on states like Queensland, who have experienced a significant boom in interstate migration. When compared to it’s capital counterparts Sydney and Melbourne, Brisbane is seen as the more affordable option served with a lifestyle that’s been relatively lockdown free. If anything, the return of international travel is likely to compound the shortage that the state is experiencing for both rentals and properties for sale, and is set to stay that way until house prices finally stabilise mid to late next year when interest rates rise.
Should you be looking to sell your home or purchase a new one, enlisting the services of a free property advisor like ESPA can often be a game changer. As an example, your advisor would likely research the property, local agents, check the zoning, evaluate market conditions, and communicate clearly with you regarding all of your options – but where do you find one?
Take The Stress Out Of Selling Property
As a completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.
