Immigration to Australia has now hit a peak not seen since the late 1800s, with the percentage of Australian residents born overseas increasing every year for the past 16 years, official figures show.
image via McGrath
About 1.3 million new immigrants moved here between 2011 and 2016, according to the latest Bureau of Statistics Census. Today, one in four (26%) Australian residents hail from overseas, making us one of the most culturally diverse countries in the world.
By comparison, we have more immigrants than the UK (13%), US (14%), Canada (22%) and New Zealand (23%).
In our latest Annual McGrath Report 2018, we took a look at the current and historical impact of so many people crossing borders into Australia. The most obvious impact is that it raises demand, particularly in Sydney and Melbourne where most immigrants choose to settle.
Sydney has the largest immigrant population of all capital cities and the 2017 Global Wealth Migration Review shows it also attracts the highest number of high net worth international buyers.
Overseas purchasers have become increasingly important in the harbour city, where locals consider home prices expensive but some overseas buyers see greater value.
Great Britain and New Zealand have long been our greatest source countries for immigrants but change is afoot with a rising middle class in Asia resulting in more Chinese, in particular, aspiring to an Australian lifestyle with our strong economy, clean air, pristine beaches and superior schools.
The 2016 Census revealed that for the first time ever, the majority of Australian residents born overseas are now from Asia, not Europe.
Around Federation, immigrants from Britain and Ireland made up more than 75% of our overseas born population, according to historical figures from the ABS. After WWII, we accepted large numbers of immigrants from other European countries such as Italy, Germany, The Netherlands and Greece.
After the White Australia policy was abolished in 1973, new groups of immigrants (particularly Asian) have increasingly led to a massive diversification of our resident immigrant population.
Today, 40% of our immigrant residents were born in Asia – up from 33% in 2011 and 24% in 2001. The dominant source countries are China and India. UN figures show these two enormous growing economies already make up 37% of the world’s population and their close proximity to us means we can expect them to be a major force in our property market for decades to come.
Immigrants can affect our market in different ways. For example, Chinese buyers have a strong preference for certain suburban locations and property types.
New Chinese immigrants tend to buy in suburbs with established Asian communities. Families are choosing new or renovated properties and young people are choosing apartments and townhouses close to shops, transport and universities.
Wealthy Chinese families are very active in the high end suburbs of Sydney and Melbourne and prioritise homes within the catchment zones of top public schools or close to private schools.
An elevated position, good feng shui and water views are highly prized and if there is an 8 in the address or sale price, it is considered good fortune.
Desirable suburbs for Chinese prestige buyers in Sydney include Mosman, Hunters Hill, Point Piper and Vaucluse; while in Melbourne they are targeting Toorak, Malvern, Balwyn and Kew.
When it comes to national population growth, net overseas immigration plays a bigger role than natural increase (births minus deaths). So, what happens to our property market if we take down the welcome sign to immigration and international investment in real estate?
There are already indications that new fees and processing charges are dissuading foreigners. The latest Foreign Investment Review Board Annual Report notes that the introduction of these fees, among other factors, contributed to a decrease in the number of approvals for purchases of established homes in FY16, down 36% compared with the previous year.
Foreign fees represent a very short-sighted approach by governments. Given the enormous impact of both immigration and foreign investment not just on our property market but also on the broader economy, it makes no sense to me why we are disincentivising it, especially when we have such a long, rich history proving the benefits.
As I’ve said previously, all of our origins are from elsewhere. Our multicultural society is one of our great assets. Why send a message to the world that we’re not open for business?