The head of financial stability at the Reserve Bank of Australia, Jonathan Kearns, delivered a speech in Sydney today on a topic of endless discussion when it comes to the property market: the role of foreign buyers.
Kearns said “drawing on a range of sources” it seems foreign buyers account for around 5% of total housing sales in Australia.
But they buy around a quarter of newly-built apartments, according to Kearns.
Here’s the quote (emphasis added):
Purchases by foreign buyers have received considerable focus in recent years. Non-residents are able to purchase newly constructed dwellings in Australia, while temporary residents, such as those in Australia for work or study, are able to purchase an existing dwelling for their primary residence. It has been hard to get a firm estimate of how large these purchases are, but drawing on a range of sources, it seems that, nationally, purchases by foreign buyers are equivalent to around 10-15 per cent of new construction, or about 5 per cent of total housing sales. The share of new construction purchases is highest in Melbourne and Sydney. It is also higher for apartments, but it is still only perhaps around one-quarter of newly built apartments. Many foreign buyers come from China, seemingly around three-quarters. Purchases of new properties by foreign buyers have eased over the past year, reportedly because of stricter enforcement of Chinese capital controls and tighter access to finance for foreign buyers.
He added some pointed comments on this, arguing that foreign demand may in fact be supporting property supply for Australian residents.
Purchases by foreign buyers do not, on the whole, reduce the supply of dwellings available to local residents and in fact may actually contribute to expansion of the housing stock. Foreign buyers in Australia for work or study would have been renting if they did not purchase. Other foreign buyers rent the property as an investment and so contribute to the rental stock. Also, there are some new developments that only proceed because they get high pre-sales from foreign buyers.
The full speech is here.