The suburbs where property prices are set to surge as Australia reopens to international students TODAY and Chinese buyers return

 

·       Chairman Georg Chmiel upbeat for Sydney's inner west, north shore, inner south 

·       International students are returning to Australia on Wednesday after 21 months 

·       SQM Research's Louis Christopher expecting rental demand for units to climb 

·       Foreigners allowed to buy brand new units or houses but not established homes 

·       Property prices in suburbs near the city are set to surge again as a reopening of Australia's border to international students draws out Chinese buyers. 

·       Juwai IQI, which markets homes to cashed-up buyers across Asia, said Sydney in particular was set to benefit as overseas university students returned on Wednesday for the first time since March 2020. 

But Melbourne was expected to benefit too, despite being a cheaper place to rent as the border reopened to foreigners. 

Chairman and co-founder Georg Chmiel said Sydney's inner west, north shore and the inner-south were likely to be in demand in 2022, with prospective Chinese buyers particularly interested in apartments. 

'When students come back, demand will increase in some of the suburbs that have suffered the most during the pandemic,' he told Daily Mail Australia. 

'International student buyers still value the same locations that they liked before the pandemic.' 

With Chinese students set to make up almost a third of the international intake, buyers from China will be particularly influential. 

'There are more students from China than any other country,' Mr Chmiel said. 

'Twenty-nine per cent of foreign students are Chinese, nearly as much as the next three countries combined.' 

From December 15, fully-vaccinated international students are being allowed into Australia, with their entry delayed by two weeks to factor in the Omicron Covid variant.  

Even before the return of international students, Sydney's rental vacancy rate in the year to November has shrunk from 3.5 per cent to 2.6 per cent, new SQM Research data showed. 

This is still higher than the capital city average of 1.5 per cent with Perth, Adelaide, Darwin, Canberra and Hobart having rental vacancy levels of less than 1 per cent. 

Melbourne has the highest rental vacancy rate of 3.2 per cent, which is more than double Brisbane's 1.3 per cent. 

SQM Research managing director Louis Christopher said rental demand for units in Australia's biggest cities was set to surge next year, following a slump during the pandemic. 

'It is clear that demand has boomed for larger properties since Covid and we are not yet recording a reversal of this trend,' he said. 

'However, I do believe 2022 will see a move towards units, simply by virtue of their relative affordability plus the new inflow of immigrants will look for unit accommodation first and foremost as they have done in the past.' 

Sydney is now vying with Canberra for having the most expensive house rent, with tenants charged a median weekly lease of $734.40 compared with $734.50 in Canberra, in the week ending on December 12. 

But Sydney units are much cheaper at $475.30 a week, which is more affordable than apartments in Canberra ($529.90) but marginally more expensive than Darwin ($458.30) and Hobart ($434.70). 

Melbourne units typically cost $372.70 a week. 

Under Foreign Investment Review Board rules, foreigners can't buy established houses or apartments but they can buy brand new properties.  

'Foreigners generally may not purchase established dwellings,' Mr Chmiel said. 

'So foreign buyers are generally most interested in new apartments and house and land packages.' 

The Labor-aligned McKell Institute has spoken out against a call from federal Liberal MP Tim Wilson, a former chairman of the House of Representatives economics committee, for borrowers to be allowed to fund a mortgage deposit with their superannuation. 

The think tank's executive director Michael Buckland said this policy would erode retirement savings and cause property prices to rise even more. 

'Super-for-housing would mean first-home buyers handing their hard-earned retirement savings to existing property owners when they would be better off investing them in super,' he said. 

'Young Australians need their retirement savings quarantined and compounding. Using these savings to fuel yet another housing market feeding frenzy would be policy madness.' 

Sydney's median apartment price stood at $837,169 in November 2021 with values surging by an annual pace of 15.2 per cent or a level half that of houses in the same city, CoreLogic data showed. 

This meant a borrower had to save up for a 20 per cent mortgage deposit of $167,434. 

That left them paying of a loan of $669,735, a level that is 7.4 times an average, full-time salary of $90,329. 

The Australian Prudential Regulation Authority considers a debt-to-income ratio of six to be risky. 

Melbourne's mid-point price for units was $626,449, with values going up by nine per cent annually. 

An average income-earner, with a 20 per cent mortgage deposit of $125,290, would owe the bank $501,159 and not be in mortgage stress with a debt-to-income ratio of 5.5. 

Capital city apartment rents per week 

SYDNEY: $475.30            MELBOURNE: $372.70 

BRISBANE: $399.90        PERTH: $398.50 

ADELAIDE: $336.70        CANBERRA: $529.90 

DARWIN: $458.30          HOBART: $434.70 

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