Nathan Birch Warns of Housing Price Surge Nobody Expected
One of Australia's top property investors is sounding the alarm, warning that a surge in housing prices is not only possible but probable, particularly at the lower end of the market. Nathan Birch, who owns nearly four hundred homes, believes a confluence of factors is about to create intense demand, even as broader market prices fall.
Mr Birch, founder of the investment group B.Invested, points to record levels of migration as the primary driver. In January alone, Australia saw over fifty-seven thousand net permanent and long-term arrivals, the highest intake on record. With India now surpassing the United Kingdom as a key source of migrants, projections suggest between two hundred and sixty thousand and three hundred thousand more people will arrive in the next year.
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This influx of new residents, many of whom will eventually transition to permanent residency, will unleash an estimated one point five million new first-home buyers into the market. Mr Birch states this is a classic supply and demand scenario, with significantly more buyers than available cheap stock. He has already experienced this firsthand, reporting being gazumped on deals between four hundred thousand and five hundred thousand dollars, indicating buyers are willing to overpay to secure properties.
He rejects the notion that migration solely impacts the rental market, explaining that individuals arriving on student visas often intend to stay permanently, eventually becoming property purchasers. Recent tax reforms, including restrictions on negative gearing, coupled with higher interest rates, have already pushed first-home buyers and investors into these cheaper outer suburbs. The government's decision to restrict negative gearing to new properties further intensifies competition, as investors will now target homes offering higher rental returns, which are typically found in these same affordable areas.
Furthermore, the Albanese government's first-home buyer scheme, which allows migrants to become permanent residents or citizens within three years, adds another layer of demand. Mr Birch argues this will make property prices even less affordable. His advice to potential investors is to act now, before the full impact of these combined pressures is realised.
The Australian Bureau of Statistics recently reported that the total value of Australian housing reached a record twelve point seven seven trillion dollars in the March quarter. However, the pace of growth has slowed, with only a two point five percent rise compared to the previous quarter's four percent increase. This moderation comes as the Reserve Bank has implemented interest rate hikes to combat inflation, slowing down market activity and leading to fewer transactions.
Despite the overall slowdown, Western Australia recorded the strongest growth in home values, with a twenty-five point four percent jump in the mean dwelling price for the March quarter. The Northern Territory, Queensland and South Australia also saw significant increases, while Victoria was the only state where the mean dwelling price declined. Experts suggest that while prices may remain soft in the coming months due to expected further rate hikes and reduced investor demand, large price declines are unlikely due to a resilient labour market and strong household equity.
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