Overseas migrants boosting demand for property in Australia

According to the latest ABS population figures, net overseas migration to Australia topped 73,398 persons during the March 2013 quarter. This compared to 60,970 persons during the March 2011 quarter, representing an increase of 20% over the last two years.

Overall, overseas migrants now account for over 60 per cent of total population growth in Australia during the March 2013 quarter.

Population growth traditionally is a key driver of the property market as it underpins demand for real estate.

Not only do overseas migrants require rental properties when they first arrive in Australia, but in later stages they start buying their own homes and then investment properties.

DEPPRO is finding that more than one in ten of our clients are overseas migrants who have arrived in Australia over the last decade and then after financially establishing themselves, they have decided to buy investment properties to create long term wealth.

These overseas migrants tend to purchase multiple investment properties over a period of time with many choosing to purchase properties in a number of locations throughout Australia to maximize their returns.

A breakdown of where migrants locate to in Australia indicate that a large proportion move to New South Wales, Victoria, Western Australia and Queensland.

LOCATIONS FAVOURED BY OVERSEAS MIGRANTS MOVING TO AUSTRALIA
Area                                      Number                         
Victoria                                  19,973

New South Wales                    19,551 

Western Australia                     14,777

Queensland                             12,589
                              
South Australia                         3,890

ACT                                        1,332

Northern Territory                      717

Tasmania                                  572
* March Quarter 2013. Source ABS Australian Demographic Statistics

DEPPRO is finding that many overseas migrants who purchase investment properties do not fully understand the tax benefits that they can obtain in Australia.

After arriving in Australia, many new migrants to Australia decide to buy investment properties as a way to create wealth without realising that there are generous tax benefits which they can claim relating to property investment in Australia.

The tax laws relating to property can differ quite substantially between Australia and other countries.

For example, the tax laws relating to buying an investment property in the United Kingdom and Australia are very different in areas such as financial benefits relating to negative gearing and depreciation benefits.

In relation to tax deprecation benefits, overseas migrants for example, may not appreciate that the tax benefits obtained through depreciation can be equivalent to 60 per cent of the total purchase price of the property.