By Sam Alaaeddin July 18, 2024

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5 Trends from the latest Foreign Buyer Report

Property Market News
5 Trends from the latest Foreign Buyer Report

Key takeaways

Foreign buyers have significantly increased their purchases of Australian real estate over the past financial year, spending $4.9 billion on 5,360 properties

This marks a substantial rise from the previous year.

Foreign buyers purchased 5,360 properties in 2022-23, up from 4,228 in 2021-22.

The average purchase price was 914,000, with China leading the investment.

Foreign buyers still constitute about 1% of all real estate purchases in Australia.

Foreign buyers are back in force with activity climbing 27%, according to the latest Foreign Buyer report.

The Treasury has just released its latest data, detailing the activity of non-resident property purchasers across Australia for FY2022–23.

Foreign buyers spent $4.9 billion on 5,360 properties which is a substantial rise from the previous year.

Alongside a notable increase in buying, several key factors indicate that behaviours around foreign buying are certainly in a state of flux.

#1 - Foreign activity rises

One of the most significant changes between FY2021–22 and FY2022–23 was the substantial increase in foreign buyer activity.

With COVID-19 severely restricting travel to and from Australia for several years, many potential buyers put their plans on hold until restrictions eased.

According to the Treasury, from 1 July 2022 to 30 June 2023, there were 5,360 residential real estate purchases involving foreign ownership, totalling $4.9 billion.

This is up from 4,228 purchases worth $3.9 billion in 2021–22, marking a 27% increase year-over-year.

#2 - Queensland shines

While Victoria remained the strongest state for foreign buying with 2,240 transactions in FY22–23, Queensland emerged as a dark horse, significantly increasing its transaction volumes.

In FY21–22, Queensland came in second with 956 sales, just ahead of NSW's 664.

In the latest reporting year, Queensland saw a surge to 1,121 sales, while NSW remained relatively stagnant with 656.

#3 - Evolving buyer profile

Interestingly, properties valued under $1 million made up a larger share of purchases in FY22–23, with the average sale price at $914,000.

According to the Australian Bureau of Statistics, foreign buyers paid an average price of $914,000, just below the overall average price across the country of $959,300 in the March quarter.

Overall, 79.8% of sales transactions were under $1 million, up from 76.5% in FY21–22, meaning the stereotypical image of foreign buyers as multimillionaires targeting premium properties is not correct.

#4 - Prime property concentrates in two states

On the other hand, for those foreign buyers who were buying more expensive properties New South Wales was their preferred destination.

According to the report, while one-fifth (1,169) of all buyers were purchasing properties worth at least $1 million and NSW recorded 284 transactions over $1 million, representing 43.2% of its overall sales for the year.

Queensland had 200 sales exceeding $1 million, making up 17.8% of its foreign investment volume.

And Victoria outshone had 569 foreign buyer transactions over $1 million each.

#5 - Buying far outstrips selling

In the past year, foreign buyer purchases far exceeded sales, with just 1,119 homes sold for a total of $1 billion.

This includes cases where a foreign buyer becomes a permanent resident or citizen without selling their property.

Of the 5,360 purchase transactions in 2022–23, 164 registrants became permanent residents or gained Australian citizenship, reducing the actual number of foreign-owned properties sold.

Once overseas residents buy in Australia, they tend to hold onto their purchases tightly.

Of course, foreign buys use different criteria for their purchases than Australian investors, seeing Australia as a safe haven for their money.

However, the future of foreign investment hinges on new policies which the governments seem to keep introducing as they pull the welcome matt out from under foreign investors.

Interestingly CoreLogic’s head of research, Eliza Owen, argues that banning foreign buyers is not a solution to Australia's housing affordability issues, saying that despite increased foreign investment, home prices fell nationally by 2% last year.

She believes that restrictions on foreign investment, including additional fees and levies, ensure that the impact on the market remains limited.

About Sam Alaaeddin With well over a decade's experience in asset and wealth management, Sam is an Elite Wealth Planner at Metropole and leverages his expertise to help clients achieve their wealth management goals. He holds a bachelor’s degree in law and commerce (Finance) and a Diploma in Financial Planning.