Demand for Australian residential property from foreign investors remains as strong as ever, despite a recent recent lift in the Australian dollar and buoyant price growth in Australia’s two largest cities.
This is no better demonstrated than in the chart below. It comes from the latest quarterly ANZ-Property Council Survey, and reveals the proportion of all residential property sales to foreign investors by state and territory, along with the annual change in house prices for each capital using data from CoreLogic.
Clearly, a lot of residential property is being bought by foreigners, accounting for 23.9% of all sales nationally in the past quarter.
Perhaps partially explaining why property price growth in Sydney and Melbourne continue to outperform other areas of the country, the proportion of sales to foreigners in Victoria and New South Wales were the highest in the country, accounting for 30.8% and 25.4% of all sales over the past three months.
The sales figures are not broken down by new and existing dwellings, although one suspects that a large number of were likely for newly built apartments.
Elsewhere figures of more than 20% were recorded in Queensland, South Australia and the ACT.
Only Tasmania and Western Australia saw a decline in the percentage of purchases by foreigners over this period.
According to Richard Yetsenga, ANZ’s acting chief economist, there’s a simple reason to explain the continued strength in offshore demand: Australian residential property is an attractive investment.
“Although lending criteria for foreign housing buyers has tightened in recent months, solid price growth and a stable economy means that the Australian housing market remains attractive,” says Yetsenga.
Figures released by Australia’s Foreign Investment Review Board earlier this year revealed that the value of approvals for foreign housing investment reached a record $61 billion in the financial year 2014-15. That was up 75% on the previous year, which itself was up 102% on the year before.
At $49 billion, new property purchases represented 81% of the total dollar value of housing approvals, with 75% of that figure accounted for by New South Wales and Victoria alone.
Given continued strength in demand and higher house prices in many areas of the country, it’s close to a near certainty that the value of foreign investment in residential property will continue to grow at fast clip, at least for the moment.
The table below, supplied by ANZ, reveals the full breakdown of property sales to foreigners over the past year, not only for residential but also office, retail, industrial and tourism property sales.