Selling your property to a foreign investor was, until recently, on par with blitzing the Powerball. Overseas buyers, especially the cashed-up Chinese, rolled in with obese-sized wallets and fattened property prices insanely. They were brought in by the voracious overseas student sector. Wealthy foreign parents secured apartments and houses for their children who were studying in Australia. What’s more, their buying power was herculean. In some cases, the proceeds from a house sale were just about enough for some lucky punter to retire on. Many formerly modest homes sold for so far above the reserve price that they touched the moon. It was truly a sellers’ market. Then the foreign investment rules changed, and along came the pandemic. The borders were closed for two years. Also, political distrust beset our two nations. Consequently, the property pipeline was closed. Now it’s open again. Will the market ever be like that again?

Who Are The Overseas Buyers?

For this article, we refer to overseas buyers as separate from foreign investors. However, occasionally we mix the context. Overseas buyers typically move here from overseas or already live here as permanent residents. They invest heavily in property, indicating that they wish to stick around. Equally, they demonstrate faith in our market’s ability to withstand any major global event. Australia represents a secure investment in financial terms as well as in their well-being. As such, they will pour their capital into a high-quality residence. On the other hand, a foreign investor who lives overseas buys property here as an investment. The new rules we refer to apply to them. They can only buy a new, off-the-plan property or vacant land. The overseas buyer is a temporary resident here to work, a permanent resident, or has a major investor visa. Expats returning home following lockdowns overseas are also buying property.

Sellers won’t be courting the moneybags anymore unless they’re housing developers selling brand new digs. The Foreign Investment And review Board rules make that clear. Overseas investors must first gain the approval of the FIRB and can only purchase new properties or vacant land. The idea here is to spur housing growth. But foreign students will still have wealthy parents, and a ticket to Australia is what most want anyway. Australia is the perfect destination for permanent residents abroad. They view Australia as a haven for preserving their wealth. But we are also the closest developed nation to Asian investor powerhouses like Hong Kong, Singapore, and Indonesia. These are all selling points understood by the buyer who is retiring or sending their children to study here. So, if you’re reaching out to that foreign market that aims to settle, you’ll need them to find your existing property.

The New Rules

When we think of overseas buyers of Australian real estate, China comes to mind first. They have been significant investors in the Australian property market. Overall investment from China peaked during 2015–2016 at an eye-gouging $32 billion. That’s a lot of fortune cookies. Then stuff happened, much of it not pleasant. The Australian government recognised that it probably wasn’t a good idea to allow an unfettered free-for-all concerning Australian assets. One such example is the sale of Darwin Port. But how did we get there? Foreign investment duly began in 1975 when the government formalised a foreign investment policy. Australia needed shekels. Allowing foreigners to buy up businesses, property, and natural resources were finally allowed. Foreign investment would raise the living standards of ordinary Australians. Even more so for extraordinary Australians. Before that, Australia maintained what might be considered protectionist rules. But the Liberal government discarded them.

In 2021, another Liberal government was under pressure to curb the selling-off of Australia. As tensions rose with China, they conceded the rules needed tightening. China, which had previously been a cash cow for Australian investment, began to resemble a Trojan Horse. The Foreign Investment And Review Board made the rules harder. Chinese investment in Australian real estate then plummeted to a pitiful $7.1 billion by 2019-2020. Beijing began to discourage investment here. But COVID had arrived, and along with the new rules, the market experienced a slowdown. Optimistic voices still talked it up and pointed to areas where it continued to show healthy signs and promise. But now the nature of the overseas buyer market has altered. For one thing, high taxes pose a disincentive for Chinese investors. Interestingly, the authoritative voices making the most positive noises about a “return” by regular Chinese buyers are themselves Chinese. Wishful thinking?

What Attracts Overseas Buyers?

You may scratch your head and wonder aloud why on earth a foreigner would want to buy property in Australia. All we have is a wonderful lifestyle, golden beaches, permanent sunshine and a stable legal system. It truly boggles the mind, but they do want to live here. Up until the pandemic and the change in foreign ownership rules, they paid top dollar for the opportunity. The property experts who predict that overseas buyers will return cite those lures. Likewise, they argue that compared to London, Japan, Beijing, and Shanghai, our prices are reasonable. Then there is the somewhat trifling matter of our having clean air as opposed to indiscriminate pollution. It may sound crazy, but all of these appeal to overseas buyers. But the nature of the buyer is expected to differ from the previous golden age. Since investment comes with prohibitive costs, overseas buyers will have different motivations.

As the pandemic winds down and international travel restarts, migrant workers and overseas students are expected to return. When they do, they’re tipped to bring a new type of buyer. They follow the trend that surfaced in the wake of the FIRB crackdown. Buying continued, but 85.6 per cent of the properties bought were vacant land or new dwellings. The rules for foreign investors require that they either build on vacant land or purchase new properties. Added to that, 79 per cent of the properties bought by overseas buyers were under the $1 million range. That figure for 2019-2020 signals a shift in the character of the new buyer. Firstly, they’re not offering the Lotto sums that were up for grabs before. Secondly, they are seeking permanent residency. All of this indicates that they’re buying and not selling. They’re planning for the future, seeking larger homes and a better lifestyle.

Getting Overseas Buyers Interested

To reach international buyers, you’ll have to broaden your advertising beyond the local market. The obvious outlet is the online portal. Your advertising should be high-end, with 3D floorplans and virtual tours. These are buyers overseas, and it’ll be quite a journey before they can physically inspect a property. You’ll want to be sure that yours is on their list of properties to inspect when they arrive. The best way to ensure that this happens is with the help of a professional real estate agent! Your perfect real estate agent will already be au fait with the overseas market and will key your advertising to their buyers. But don’t expect to set a fantasy price; you’ll need to be prepared to negotiate if they take the bait. Overseas buyers, especially at auctions, are treading more cautiously. This doesn’t mean you should let them play you for a sucker either.

Having said that, you should know what your real estate agent is doing. They must be establishing good relationships with their international equivalents. For obvious reasons, your listing will need to be reproduced in multiple languages. As we pointed out above, video, photographs, and 3D interactive concepts must be of top-notch quality. Your property should be listed in the major international real estate periodicals in all its glory. As with any listing, its features and advantages must be highlighted. The location will be essential here, and that must be exploited. After all, you are selling a lifestyle. Again, most agencies will have all this covered. But that doesn’t mean just picking any old real estate agent; you’ll need the perfect agent for you! If you are selling your house while residing abroad, you must be aware of all the regulations.

Top five countries investing in Australian real estate in 2019-2020

• United States: $13.1 billion
• Singapore: $9.5 billion
• China: $7.1 billion
• Germany: $3.7 billion
• Canada: $3.3 billion

Conclusion

The political, financial, and international environments have changed since the peak years of foreign investment. That does not, however, rule out international investment or foreign buyers. It simply means a change like those buyers. You should by no means discount selling your property to an overseas buyer. They are an integral part of the property market’s ecosystem and will continue to grow. The slowing of their passage has ended, and now it’s just a matter of waiting for their numbers to build. When dealing with the overseas market, the services of a professional real estate agent are essential. If you’re selling your property and need an agent versed in the overseas market, then contact us! We will match you with the best agent for you.