One in six Australian new homes bought by Foreigners
The latest Australian Residential Property Survey for Q3 from NAB has been released showing an increased level of foreign demand in new Australian homes. Currently, just one in every six new homes is now bought by a foreigner and this number is set to rise even further.
The survey indicates that foreign buyers contributed to 16.8 per cent of the total demand for brand new developments, with 2015 expected to reach 17.3 per cent.
Demand for existing homes from foreign buyers has also increased since last quarter in all states except NSW, with an overall demand rising to 8.2 per cent from 7.2 per cent in Q2. However, Victoria saw a record high of 11.5 per cent of demand for existing homes. The NAB survey also shows that foreign buyers were more active in established property markets.
Although foreign buyers are buying in all states, Victoria remains the most popular state, with an estimated 24.8 per cent of demand (or one in four new homes). Chinese investors play a large part in this.
In comparison, local investors decreased by over 5 per cent to 27 per cent in Q3; thereby accounting for a smaller share of demand in all states.
First time buyers have also dropped in the established property market, particularly in Victoria, falling from 22.5 per cent in Q2 to 15 per cent in Q3. However this only takes into account those who applied for the first home buyer grants.
Typically foreign buyers are opting for higher-end, luxurious apartments, whilst first home buyers tend to look for more affordable housing so there is little overlap here. It’s local investors that are the ones who are making it harder for first timers who are encouraged by low interest rates, superannuation changes and tax savings to invest in property.
Many property analysts also believe that foreign investment is the main culprit for the ever-increasing property prices within Australia’s capital cities, especially Sydney. It will be interesting to see what Q4 brings.
Published on 22nd of October 2014 by Marty Stanowich