- Value and transactions are both down by 20%
- 68% of foreign acquisitions were for new dwellings
- VIC, NSW and QLD account for 92% of all foreign buyer purchases
The latest foreign buyer data from the Foreign Investment Review Board (“FIRB”) reveals that foreign buyer transactions dropped in both value and number of transactions by approximately 20% in the 2019 to 2020 financial year.
The value of foreign buying dropped from $8.5 billion to $6 billion during the past three years.
This data includes the period during which Covid had its biggest impact on Australian markets, from January to June of 2020.
Despite this drop, foreign buyers remain a significant presence in the market. They purchased 7,482 dwellings worth $6 billion, according to the FIRB data.
Sixty-eight per cent of foreign buyer acquisitions were new dwellings, 18% were vacant land, and 14% were establish dwellings.
And for those who are worried that foreign buyers are pushing up prices, it is reassuring to see that 79% of foreign buyer purchases were worth less than $1 million. Meanwhile, the average home price in Sydney has recently been reported as having reached $1.6 million.
The most popular states for foreign buyers are Victoria, New South Wales, and Queensland. Together, these three states account for $92 out of every $100 foreign buyers spend on real estate in Australia.
My colleague Lily Chong, Director of IQI WA in Perth, told me that despite long being less popular with foreign buyers than the eastern capital cities, Perth is now beginning to attract more buyers.
Around half the foreign buyers she works with are sophisticated investors who focus purely on yields, prices, and likely capital gains.
One thing is clear from the data. Foreign participants in Australian property markets are net buyers.
They acquire four-times more Australian property than they sell. They are not speculative buyers who seek to flip their homes. And they aren’t buying for short-term goals.
Foreign buyers in many cases are acquiring property in Australia to pass on to the next generation.
Australia is blessed by its geography; it is close to Asia.
And, globally, the largest cohort of cross-border home buyers is Asian buyers. Whether Melbourne, Sydney, London, Athens or New York, the greatest number of buyers comes from greater China, Singapore, Indonesia, Malaysia, and Vietnam.
There is no question that the Covid pandemic has restricted buying from overseas residents, but foreign buyers still want to own Australian property.
At Juwai IQI, we expect stabilization and even a modest uptick in foreign buying in the second half of 2022.
Foreign students, international travel, and inbound immigration are all gearing back up. These three drivers will help contribute to increasing the number of foreign buyer transactions by the end of the year.
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Daniel Ho is Co-Founder and Group Managing Director of Juwai IQI, Asia’s global real estate technology group that transacted more than 31,000 properties in 2021 and advertises US$4 trillion of property from 111 countries.
