CHART OF THE DAY: Foreign investors are scooping up housing on Australia's east coast


Last Friday we learnt that the divide between Australia’s housing haves and have nots looks set to widen even further in the years ahead.

A combination of record-low interest rates, a lack of housing reform, low household income growth and the increased propensity for younger Australians to save in the post-GFC period would further push housing affordability further out of reach, according to analysis conducted by ANZ.

However, perhaps there is another factor contributing to stretched housing valuations – foreign investment in Australia’s residential housing market.

The chart below, supplied by ANZ in its latest quarterly property council survey, shows what’s going on:

As you can see, 22.4% of all residential property sales recorded in the past quarter were to foreign buyers, unchanged from the previous quarter. Victoria had the highest proportion of sales to foreigners – 30.5% – while those in NSW numbered 26.3%, the second-highest level of all states and territories.

The full table of sales to international investors, not only for residential but also other property sub-sectors, can be found below.

Unsurprisingly, as the chart also reveals, these states also recorded the largest annualised increase in residential property prices – over 15% and 8% respectively.

While other factors are contributing to the gains in residential property prices, with foreigners mopping up over 25% of all available stock in NSW and Victoria during the quarter, it’s clear that sales to this component are also contributing to the steep increase in house prices.

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