Without migrant buyers, Australia’s property market is expected to struggle for ‘several years’
The lack of migration to Australia due to coronavirus is expected to hit the property market hard and experts say there is no knowing how long it will take to bounce back.
Gold Coast real estate agent Sam Guo is used to making high end deals to sell penthouses and waterfront properties to Chinese buyers.
But that part of his business has dried up with the closure of international borders due to coronavirus.
“It has affected a lot since the lockdowns and no one can fly into Australia, so definitely we have been affected,” the Ray White real estate agent told SBS News.
With Australia’s population growth set to come to a screeching halt, experts are concerned the property market will be hit hard.
Prime Minister Scott Morrison has said he expects net overseas migration to fall 30 per cent this year and a staggering 85 per cent next financial year due to the virus.
Since the start of the year, at least 300,000 temporary migrants are estimated to have left the country.
Property buyer Rich Harvey specialises in buying property for expat clients.
“When COVID-19 hit, it really hit quite dramatically, we saw our phones go dead the week after the lockdown restrictions were in place. We’d had a pretty good run in February,” he said.
Leading property academics say the property market’s ability to rebound will depend in part on how quickly migration numbers can recover to pre-COVID-19 levels.
“Until population growth recovers to something like pre-COVID levels then it’s going to have a negative impact on the housing market,” Curtin University professor and chair of the Western Australian Housing Industry Forecasting Group Steven Rowley said.
“Coupled with low consumer confidence and above average levels of unemployment these are not great times for the housing markets. Then you have to look at investors as well and what confidence investors have to buy property.”
He said the biggest impact will be felt in the major cities like Sydney and Melbourne where the bulk of population growth comes from net overseas migration.
While the latest data showed national house prices rose slightly in April, leading property forecasters are predicting double-digit drops as the full economic brunt of coronavirus hits.
On Wednesday, Australia’s largest home lender Commonwealth Bank warned of a potential 32 per cent drop in housing prices under a worst-case scenario.
Mr Rowley said it was impossible to know how long it would take for the market to bounce back.
“It is impossible to tell how long the recovery will take. Some markets will bounce back quicker than others,” he said.
Urban planning expert Shane Geha, a founding partner of EG Advisory, said he expected the downturn to be more of a “blip” on the property market’s radar.
“Certainly, housing and rent may become slightly more affordable. On the face of it you may think it is a plus but for those who own their own homes, it’s a big negative. Also on investment, for those who are looking to invest, it’s a bad time as well,” he said.
Labor’s home affairs spokesperson Kristina Keneally has called for a further reduction to Australia’s migration intake when travel restrictions lift – a proposal causing concern among property market experts.
“If you want innovation to continue, and if you want investment to continue and if you want the economic health of the nation to continue then I think cutting migration at a period like this would be detrimental rather than helpful,” Mr Geha said.
Nigel Stapledon is a research fellow in real estate at the University of New South Wales.
He said Labor’s calls to push migration lower than the pre-COVID-19 levels would have a negative impact on the housing market.
“Talking about deliberately restraining net overseas migration will not be positive for the economy at all, or the housing market,” Mr Stapledon said.
“We are probably going to have two years of migration downturn, but it could bounce back after that. It may be that we get a strong kickback, which would specifically be good for the property market,” he added.
He said it was possible the market would make a quick recovery.
“But how quickly net overseas migration bounces back will impact the recovery,” he said.
Despite the downturn reducing his business by around 20 per cent, Sam Guo says he is still fielding calls daily from interested parties.
“Once the doors reopen again there will be foreign buyers and migrants coming into the country,” he said.
Mr Harvey also expects the downturn to be short lived.
“For those living overseas, we are seeing them put their plans on hold temporarily. The demand is there, it is just sitting under the surface because they can’t get here and inspect the houses,” he said.
People in Australia must stay at least 1.5 metres away from others. Check your state’s restrictions on gathering limits. Testing for coronavirus is now widely available across Australia.
If you are experiencing cold or flu symptoms, arrange a test by calling your doctor or contact the Coronavirus Health Information Hotline on 1800 020 080.
The federal government’s coronavirus tracing app COVIDSafe is available for download from your phone’s app store.