The share of enquiries from buyers to purchase residential property interstate has jumped significantly in 2023, with some states attracting more interest than others.
This year, 23% of all enquiries to purchase property on realestate.com.au came from buyers based in a different state to the one they were looking to buy in.
Last year, in comparison, interstate buyers accounted for 17% of enquiries, up from 15% in 2021, and more than double the pandemic low of 11% in 2020.
South Australia has been the most popular state with interstate buyers this year, who accounted for 29% of the state’s enquiries. Queensland and Western Australia weren’t far behind, with a respective 27% and 25% of enquiries made by interstate buyers.
In comparison, just 15% of enquiries to purchase property in New South Wales came from interstate buyers – the lowest share of any state.
In Victoria, interstate buyers accounted for 23% of enquiries, the second lowest level behind New South Wales.
As the least affordable state, it is unsurprising New South Wales saw the fewest interstate buy enquiries. On the other hand, those who already own property in New South Wales may have greater purchasing power in the other states.
The median price of a home in Greater Sydney increased by 31.7% between March 2020 and October 2023, similar to the 31.2% growth seen across Australia’s combined capital city markets over the same period.
But while the growth in percentage terms is similar, the associated dollar value increase is wildly different given the underlying price of property across different markets.
Based on October’s median home price of $824,000 across Australia’s combined capital cities, the post-pandemic growth rate of 31.2% corresponds to a gain of $196,000.
In Greater Sydney, in contrast, where the median price of home was sitting at $1,070,000 in October, the 31.7% growth reflects a rise of $258,000.
Furthermore, a resident of Greater Sydney who may be unable to afford to buy a home to live in, may instead look to get into the property market by buying an investment in a more affordable state as a so-called ‘rentvester’.
There are other benefits to buying interstate. Because land tax is calculated based on the cumulative total of land owned in a given state, investors with more than one property have an incentive to spread their portfolio across different states.
Another incentive is stamp duty. Stamp duty is a non-deductible one-off cost that can vary substantially by state. For example, an investor looking to purchase a $600,000 established property in Victoria will cop around $33,000 in government fees, compared to around $22,000 for the same value investment in Queensland.
While there have been more investors selling than buying over the past five years, there are a number of factors that are likely to draw increased investment in real estate.
Just 1.02% of all rental properties were sitting vacant in October, while rents were up 14.6% nationally over the 12 months ending September.
Many investors realise this is likely to drive property prices higher, regardless of where interest rates sit.