Foreign home buyer demand falling
Foreign buyers are playing a smaller role in Australia’s housing market, with demand falling.
A new property survey has shown foreign demand for Australian housing is on the decline.
NAB’s Quarterly Australian Residential Property Survey has revealed that the overall share of foreign buyers in Australian property markets has fallen to a two-and-a-half year low in both new and established property markets for the first quarter of the year.
“Their market share of property sales in both new and established housing markets has been falling since the final quarter of 2015, which also coincides with the introduction of tighter legislation around foreign purchases of Australian property,” NAB chief economist Alan Oster said.
Foreign buyers accounted for 11.8% of total new property sales over the quarter, down from 14.4% in the final quarter of 2015. In established markets, foreign demand fell to 7.2% from 8.6% in the previous quarter.
Victoria particularly has seen a drop-off in activity from foreign buyers, with market share falling from 16.4% in the final quarter of 2015 to 10.7%. The result was the lowest level of foreign buying activity in the state in two years, and was significantly below its peak of 32.5% in the fourth quarter of 2014.
New South Wales also saw a decline in foreign buyer activity, albeit much less marked. Foreign buyer activity fell from 11.7% in the fourth quarter of 2015 to 11.1% in the first quarter of 2016. This was down from a high of 21% in the first quarter of 2015.
Queensland, meanwhile, continued to see strong demand amongst foreign buyers, accounting for 21.9% of new property sales for the quarter. The market share of foreign buyers in new property markets in the state has grown for three consecutive quarters, and NAB suggested buyers may be attracted by the lower average prices.
Apartments were the most popular type of property amongst foreign buyers, accounting for 51% of all foreign purchases of Australian residential property. Houses accounted for 31%, while redevelopment accounted for 18% of demand.
The Reserve Bank recently expressed concern about the potential slowing of Chinese investment, and the impact a downturn in demand could have on property prices. NAB echoed the sentiment, saying it expected house price growth to broadly ease, particularly in markets such as Sydney and Melbourne where foreign investment is a larger element.