Overseas investors bought more than 10% of all new housing in Australia in the first quarter of 2017, and more than 7% of existing stock (established property), according to new research from the National Australia Bank (NAB).
At this level, it appears clearly that foreign buyers in Australia represent a considerable market. How big is that market ?
Foreigners were authorized to splash $72.4 billion on residential real estate nationwide in 2015-16, with NSW ($20.7 billion) and Queensland ($16.9 billion) the next most popular states after Victoria. In terms of number of transactions, this is 40149 properties sold to foreign buyers in 2015-16.
In Australia, demand for property from foreign buyers has been strong over the past seven years as you can see on the chart below.
This chart from the NAB shows the proportion of new homes sold to foreign investors, breaking down the figures by individual state and clearly showing that foreign buyers are very present not just in Victoria or Queensland, but also in New South Wales and Western Australia where the figure is above 5%.
In terms of sales of existing properties, the NAB said that 7.2% of sales went to foreign investors during the first quarter of 2017, with again strong figures and also quite notably extremely close figures in all Australian regions. Victoria, New South Wales, Queensland and Western Australia had a proportion of foreign buyers for existing property comprised between 6% and 8%.
Quite interestingly, the study by the National Australia Bank (NAB) also reported that 53% of all property purchases made by foreign buyers last quarter were for apartments, with 30% for houses. The remaining 17% were land for redevelopment. However there were regional specificities, as in New South Wales foreign buyers focused quite strongly on apartments, which represented 63% of their property purchases.
There are often misconceptions about what foreign buyers buy, in terms of properties. The press coverage of multi-million dollar transactions makes local agents and people think that foreign buyers are active mostly on the luxury segment, which is entirely wrong. As you can see below, the vast majority of those purchases were properties valued at $1 million or lower, putting foreign investors in the same market as local investors and first-home buyers.
In terms of nationalities of foreign buyers in Australia, here again a bias deserves to be destroyed. The press coverage is mostly if not only about Chinese buyers. However according to the NAB report, Chinese buyers do not represent more than 25% of the total sales to foreign buyers. In other terms, Americans, Canadians, Europeans, South-East Asians are a bigger market and represent 75% of sales to foreign buyers in Australia.
Thanks for reading my latest article on foreign buyers in Australia. For more information please consult https://foreignbuyerswatch.com/category/foreign-buyers-in-australia/ or reach out to me by message directly.
Sources:
Foreign Investment Review Board annual report 2015-16
Bonus: nationalities
TOP FOREIGN BUYERS OF AUSTRALIAN PROPERTY 2015-16
*Residential and commercial
China: $31.912 billion
US: $8.206 billion
Singapore: $4.56 billion
United Arab Emirates: $3.597 billion
Canada: $3.18 billion
Total: $122.112