Interstate buyer demand jumps as many are priced out of their home markets.

The proportion of property seekers on realestate.com.au who are searching interstate has steadily risen from 16% in 2021 to 18% the following year.

The largest jump in demand has been in New South Wales, where just under one-in four searches were for properties in other states.

Except for the territories, which are home to more transitory populations, buyers in NSW are the most likely in Australia to look interstate.

Both buying power and affordability are a part of the story here.

Picture: Getty

Greater Sydney is Australia’s most expensive capital city with the median cost of a unit at $760,000 – above the median cost of a house in Adelaide, Perth, Hobart, and Darwin.  While property prices have been falling, they remain 21% higher compared to pre-pandemic levels.

What’s more, last year’s interest rate rises have slashed the average amount a buyer can borrow by about 25%.

For Sydneysiders priced out of their home market but looking to get onto the property ladder, interstate areas can present an opportunity.

Additionally, higher median prices mean those who already own in Greater Sydney are likely to have greater buying power interstate, whether through selling to buy or via usable equity.

Picture: Getty

For homeowners in the more affordable states, this is less likely to be the case.

While property seekers based in Sydney, Melbourne, and Brisbane are searching across a variety of states, those based in Darwin and Adelaide – the two most affordable cities – are more likely to be priced out of the other states.

Among those based in the Northern Territory, the top 10 interstate suburbs buyers are searching for are all in South Australia. Likewise, for those in SA, nine of the top ten interstate suburbs searched for were in the NT.

Overall, interstate buyers are most likely to be searching in Queensland, which accounted for 34% of all interstate searches in 2022. Victoria and New South Wales followed, each with 17% of the share.

Source: realestate.com.au

Of note is the mismatch between where buyers are searching from versus where they are looking.

For example, 38% of interstate searches came from those in NSW – more than double the number of searches attracted by the state.

In contrast, Queensland, Western Australia, Tasmania, and the NT attracted more than double the share of interstate buy searches than they generated.

While the number of interstate purchases is not yet significant at a whole-of-state level, there is the potential for certain markets to be significantly impacted.

Picture: Getty

This was seen during the pandemic when demand for regional housing surged among former city dwellers – leading prices to skyrocket and reducing affordability for locals in these regions.
The same challenge exists across interstate markets.

Take Queensland, for example. One-third of all buy searches come from interstate, and particularly from NSW and Victoria.

This article was originally published on realestate.com.au ‘Interstate buyers demand jumps as many are priced out of their home markets.’