Safe Australia will fuel foreign investment:
Let’s discuss the elephant in most property investment rooms; ‘Foreign Investment’.
My search for the best performing property investment markets over the past 30 years has not been limited to one state or even one country. I’ve explored the potential of investing in many countries around the world, using my proven criteria for minimising risk, protecting my cash flow, and maximising a property’s performance. Each time, finding myself more confident in the benefits of investing within Australia, above all other countries I inspected.
Standing outside the Australian property market, looking back on what so many investors take for granted, gave me many new perspectives. One interesting thing I learned was about how other countries viewed Australia. Shockingly most investors from other countries saw our nation as a ‘big quarry’ rich in resources, with a small number of beautiful cities and towns dotted sparsely along our coastlines.
Our seemingly endless natural resources along with our beautiful cities offering dream lifestyles, made astute international investors excited about the long term future of Australia’s real estate market.
Australia is a ‘Millionaire Magnet’.
Australia has emerged as the top destination for global millionaire migration, followed by the US and Canada. High-Net Wealth Individuals (HNWIs) are making their way to Australian shores with as many as 12,000 Millionaires arriving each year. This trend has seen Australia maintain the No1 position for the past four years in a row.
Australia’s safety rating prior to COVID-19 was already a key attraction for migrating millionaires, along with our first-class health care system, and the absence of an inheritance tax.
‘Safe Australia’ status could provide a housing market ‘safety net’.
The popularity of migration to Australia is only expected to grow thanks to our world, leading success in the battle against COVID-19.
The heightened awareness around our global exposure to another virus is expected to see trends change across the world. Countries that typically saw a flow of migration towards the US and throughout Europe are expected to see this attraction swing towards new preferred safe havens.
Before COVID-19, the Australian Government was forced to reduce the flow of both migration and foreign investment in an effort to restrain the strong performance we were seeing in our property markets, particularly Sydney and Melbourne. Post COVID-19 this could be different.
How our economy recovers will determine how our Government reacts next. If our property market starts to enter dangerous territory, I expect we will see the foreign investment tap turned on. How far it’s turned on will be determined by what is required to prevent a housing collapse.
This subtle ‘safety net’ would help maintain the value of our property market, the asset class that underpins the personal wealth of most Australians. If the Government stood back and allowed our housing market to crash, the impact would be far greater than the impact of supporting foreign investment.
But please don’t expect to see our media capture any positives if this safety mechanism is utilised. If this approach is adopted, I expect we will see our headlines focus on how our housing is being stolen away from the grasps of first home buyers.