There’s no doubt that foreign buyers have buoyed certain segments of our property markets over the last few years, but it looks like things are changing.
The overall share of foreign buyers in Australian property markets fell to a 2½ year low in both new and established property markets in the first quarter of 2016 according to according to NAB’s latest Residential Property Survey.
Foreign buyers accounted for just 11.8% of total new property sales (14.4% in Q4 of 2015) and 7.2% in established property markets (8.6% in Q4 last year).
In new property markets, foreign buyers fell to 10.7% in Vic (16.4% in Q4) – its lowest level in 2 years and significantly below Survey high levels of 32.5% in Q4’14.
Foreign buyers were also less prevalent in NSW, where their market share fell to 11.1% (11.7% in Q4).
This down from a Survey high 21% in Q1’15 and now at its lowest level since Q4’13.
In WA, foreign buyers of new property accounted for just 2.9% of total demand (5.8% in Q4) down from around 10-11% in the first half of 2015.
In contrast, the share of foreign buyers in new property markets in Queensland continued to grow, rising to 21.9% in Q1’16 (20.9% in Q4).
The market share of foreign buyers in new property markets has grown for three consecutive quarters and may suggest that they are being attracted by lower average prices there.
In established property markets, foreign buyers accounted for just 7.1% of total demand in Victoria – a 3 year low and down from 8.6% in Q4.
Foreign buyers were also less active in NSW (7.8% vs. 9.4% in Q4) and Queensland (6.7% vs. 8.9% in Q4), but they increased their market share in WA to a Survey high 8.8% (7.2% in Q4
TYPE OF PROPERTY PURCHASED BY FOREIGN BUYERS
Overall, 51% of all foreign purchases of Australian residential property were for apartments (53% in Q4), 31% houses (32% in Q4) and 18% for re-development (16% in Q4).
However, these ratios continue to vary widely by state.
- In Victoria, 39.4% of sales in Q1’16 were for apartments (down from 44.2% in Q4), 37.6% were houses (35.2% in Q4) and almost 1 in 4 (23.1%) was land for re-development (20.6% in Q4).
- In NSW, 54.6% of all properties purchased by foreigners were apartments (53.9% in Q4) and 29.9% houses (32.4% in Q4). The share of property bought for re-development purposes rose to 15.9% (14.1% in Q4).
- In QLD, apartments made up 58.8% of all sales (60.8% in Q4) – still by far the biggest share among the main states. Houses accounted for just 24.3% of foreign sales (26.4% in Q4), but purchases for re-development purposes climbed to 17.5% (12.8% in Q4).
- In WA, apartment sales accounted for 48.4% of all foreign purchases (50.8% in Q4), houses for 34.5% (29.8% in Q4) and land for re-development 17% (19.4% in Q4).
Price Range of Property Purchased by Foreign Buyers
Around 31% of apartments purchased by foreigners were valued at less than $500,000 (33.7% in Q4) while 40% were valued between $500,000-$1 million (41.7% in Q4).
Just over 16% were in the $1-2 million range (14.8% in Q4), with the number of sales in the $2-5 million range unchanged at 7.9%.
Just over 1 in 20 foreign buyers (5.5%) purchased apartments valued above $5 million (3.3% in Q4).
There remain some interesting differences across states.
- In the apartment market, more foreign buyers in WA (42.8%) purchased properties worth less than $500,000 than in any other state.
- In NSW, just 18.4% of apartment purchases were below $500,000, probably reflecting a lower stock of apartments at this price level.
- Almost one in two apartments purchased in Queensland were in the $500,000-$1 million range, compared to just 34% in Victoria.
- It was also notable that one in four purchases in NSW were in the $1-2 million range, compared to around 12-14% in all other states.
More foreign buyers in NSW (6.6%) and VIC (4.9%) purchased apartments valued over $5 million than in any other state.Houses:
In the house market, around 63% of foreign purchases were valued below $1 million.
Around 25% were for properties below $500k and 38% between $500,000-$1 million.
Just over 23% of all house sales were in the $1-2 million range, 11% in the $2-5 million range and 4% over $5 million.
By state, approximately 57% of houses sold to foreigners in VIC and 46% in NSW were valued below $1 million, compared to 72% in QLD and 82% in WA.
Around 35% of houses purchased in NSW and 25% in VIC were valued between $1-2 million, with 15% and 13% of houses in NSW and VIC respectively valued between $2-5 million.
Almost 7% of houses in VIC and just over 4% of houses in NSW were sold for more than $5 million.
Also published on Medium.