British Investors Look to Australian Real Estate Market
Low interest rates, weak AUD and a transparent market attract more British property investors to Australia
More UK investors are choosing to purchase Australian residential property, driven by record low interest rates, the comparatively weak AUD and escalating prices at home.
Melbourne and Brisbane are experiencing the highest demand from both UK and other overseas buyers. While there is still interest in Sydney, rocketing prices have led to tighter investor lending criteria and fewer overseas buyers as a result.
The latest insights come from the Q3 Global Real Estate Outlook from property investment firm IP Global, a quarterly report which identifies and analyses the best-performing cities for property investment.
British nationals are now one of the largest overseas buying groups in the Australian market, according to data from IP Global, although Indian and Chinese investors are buying units at a higher price point. With volatile equity markets at home, Chinese buyers are increasingly putting their money into stable markets like Australia, the UK and the US.
One of the most popular cities for overseas investors is Melbourne, consistently voted one of the world's most liveable cities, where buyers are set to see returns of up to 8% next year. Brisbane is also rapidly boosting its international reputation; house prices have risen 5% per annum over the last three years, led by regeneration in areas such as Cannon Hill and Newstead.
Jonathan Gordon, Director at IP Global, said:
“British investors are appreciating the value of the Australian property market more now than ever before. It offers a transparent and liquid market that is continuing to generate strong yields and capital growth. Of course Australia has traditionally been the destination for British expats looking to relocate and find a ‘home in the sun’. Now we are seeing British investors going in specifically from an investor perspective to capitalise on its growing property market.
“Brisbane and Melbourne are two of the most popular metropolitan areas. While Sydney still has some appeal, particularly for Asian buyers, many investors are wary about committing to a market where high prices and increased supply are likely to limit the rate of return.”
In terms of UK investment, buyers are looking for new assets outside of central London where the average house price is set to reach £1 million in the next five years. Manchester also continues to attract interest, particularly in the buy-to-let market. Rental rates have risen 4% in the last year, meaning Manchester now has the highest rental yields in the whole of the UK at 7.98%.