How international visitors are driving Australian property markets
Among my daily ritual of collating and analysing property-related information is reviewing economic performance using a range of metrics. One such metrics is the change in volumes of overseas visitors.
International visitors come to Australia for a variety of reasons including to study here, to do business here, and to holiday here.
Driven primarily by the phenomenal rise in Asia’s middle class, there’s been a world-wide tourism boom since 2013. According to data, there were about seven million new tourism jobs created across the globe in 2017, which was actually one in every five new jobs created in the world. The sector grew by 50 per cent more than the world’s economy generally. That figure is just the tip of the tourism iceberg if you ask me – Asia’s middle class (particularly in China) is expected to grow by an extraordinary 2.5 billion people by 2030 and they’re expected to spend some of their newfound wealth on overseas travel.
The ABS yesterday released their latest data for overseas arrivals and departures. When overseas visitor numbers are compared to how capital city property markets performed over that same period there’s a fascinating correlation: Overseas visitors to Australia for the last financial year were an incredibly impressive 34.9 per cent higher than four years ago.
Sydney and Melbourne have always had higher international profiles than any other Australian cities so it comes as no surprise that international visitor volumes to NSW and VIC continue to be strong. That strength has contributed towards Sydney and Melbourne's strong economy which underpinned some impressive property price growth
The absolute standout over the last four years is Tasmania with visitor volumes increasing by a whopping 110 per cent, three times the national average and more than double NSW and VIC.
From Propertyology’s obsession with how the Asian Century will benefit specific property markets across Australia, we made a bold decision back in early 2014 to help people invest in Hobart. The state had been in recession for a few years however, we forecast that industry sectors including tourism were due to rebound, create more jobs, boost local confidence, attract interstate migration, and drive property prices.
Canberra has been the big surprise packet with a 60 per cent increase in overseas visitors in the ACT over the last four years. It’s no coincidence that Canberra’s property market has been the second-best capital city, behind Hobart, over the last two years.
The Northern Territory (-4.7 per cent) and Western Australia (19 per cent) have seen their respective changes in overseas arrivals well below the national average. Again, the property markets of those two capital cities have been Australia’s worst.
The Sunshine State has arguably more tourist attractions than anyone, however, even with the once-in-a-generation Commonwealth Games, its tourism sector has been underwhelming. Let’s not forget that many high-profile property commentators have been trumpeting that Brisbane would boom for a few years
Property investors would be wise to not underestimate the significant tourism growth that is unfolding in several regional locations.
