Foreign investors forecasted to abandon apartment market

Adam Smith 24 July 2017

coin graph down1The number of new apartments purchased by foreign buyers is tipped to halve.

Master Builders Australia’s (MBA) Industry Forecasts report for the June quarter has predicted that foreign investment in apartments will be set to fall from a peak of 48,251 in June last year to 23,304 in June 2019, the Australian Financial Review (AFR) has reported. According to MBA, foreign investment is set to take a hit as new levies take hold and banks cut back on their lending to foreign buyers.

"Foreign investor activity is expected to fall considerably in the next two years as recent moves by the Commonwealth government and by the NSW state government tighten restrictions on foreign property buyers," the MBA report said.

While MBA has forecast a decline in foreign investment in detached housing as well, the drop in apartment investment is set to be more dramatic, the AFR reported.

Downward trend for home approvals "locked in"

The group has also predicted a drop of nearly 40% in the number of apartments being constructed in New South Wales. Higher prices and a reliance on investors is set to make the NSW market the country’s hardest hit by a slowdown in commencements.

The MBA has forecast a 44.3% decline for foreign-funded housing starts and a 23% decline for total new housing starts. However, foreign-funded detached housing commencements are set to begin recovering in 2019, the MBA has predicted.

Image: Shutterstock

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