Foreign Property Buyers On The Rise

According to the latest NAB Quarterly Australian Residential Property Survey, Q4 2016, foreign buyers increased their market share in both new and established housing markets for the first time since late-2015.

In Q4, foreign buyers accounted for 10.9% of all new property purchases (10.2% in Q3) – the highest level since Q1’16. In established housing markets, their share rose to 7.6% (6.4% in Q3) – the highest level since Q4 2015.

In new property markets, foreign buyers were noticeably more prevalent in VIC, where their market share of sales rose to 19.3% (15.0% in Q3).

In WA, their market share grew to 9.3% (6.6% in Q4). Interestingly, the share of foreign buyers in WA has been climbing steadily since Q2’16, suggesting foreign buyers may be seeing greater value as local prices fall.

Foreign buyer levels were however broadly unchanged in NSW at 8.1% (8.0% in Q3) and fell in QLD to 9.2% (10.5% in Q3) to its lowest level since mid-2014.

In established housing markets, the share of foreign buyers increased to 10.8% in VIC (8.5% in Q3) – its highest level in over a year – and 8.4% in NSW (7.2% in Q3). Foreign buyers were also a little more active in WA (5.4% vs. 5.2% in Q3), but were less prominent in QLD, where their market share fell to just 5.0% (5.7% in Q3) – the lowest since mid-2012.

Around 55% of all property purchases made by foreign buyers in Q4 were for apartments, 30% houses and 15% land for re-development.

But these ratios varied quite a lot by state. In VIC, around 47% of sales were for apartments, compared to around 59% in NSW and QLD and 52% in WA. In contrast, around 33% of foreign purchases in WA and 32% in VIC consisted of houses, compared to 27% in NSW and 31% in QLD. Just over 1 in 5 (21%) properties purchased by foreign buyers in VIC were for dwellings/land for re-development purposes, compared to just 11-15% in all other states.

By price point, around 30% of apartments purchased by foreigners were valued at less than $500,000, and 45% were valued at $500,000-$1 million. Around 16% were for apartments worth $1-2 million, 7% for properties worth $2-1 million and 3% for apartments over $5 million.

Around 41% of apartments sales in QLD and 42% in WA were for properties under $500,000, compared to just 20% in NSW and 30% in VIC. Property sales in the $500,000-$1 million range varied from 47% in NSW t0 40% in VIC.

At the prestige end of the market, around 11% of property sales in NSW and VIC were over $2 million, compared to just 6% in QLD and WA.

Author: Martin North

Martin North is the Principal of Digital Finance Analytics

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