I’m not going to pretend that the following is forensic but with the release late last week of the Foreign Investment Review Board’s (FIRB) annual report, we can now estimate the degree of involvement of foreign purchases in the Australian property market.
According to FIRB, residential property recorded 20.92 billion from 9556 approvals:
That’s an average of $2.2 million per approval which must be significantly distorted by a few multiple purchases of new units to make sense, you would think. As you can see, 80% of purchases are in the “for development” category. And the state by state break up is also revealing:
Victoria dominates, suggesting to me, at least, that the student market is big component of this inflowing capital, probably in NSW as well.
Here’s the country of origin table:
China is no surprise, though I am a bit surprised by the US. Anyways, these figures can be combined with some broader aggregate data to give us an idea of the foreign buyer’s influence over the market.
According to the Reserve Bank of Australia (RBA) Australia’s housing stock is valued at $4.13 trillion as at June 2011. The RBA also reckons that 4% of the housing market turned over in 2010/11:
Finally, RP Data reckons that the number of housing transactions in 2010, not a perfect match, was 370,000.
Therefore we can estimate that:
- the number of transactions involving foreign buyers is somewhere around 3% of the total
- but that accounts for around 12.5% of value (if you’ll allow me to translate the 4% of housing stock that transacts to 4% of value – a dubious proposition!)
- the impact is heavily oriented towards new properties (though we don’t know what happened during the suspension of rules in 08/09 which is, I guess, why they were suspended)
For context, Bloomie reckons that the US attracted $80 billion of foreign purchases of property last year, on housing stock of $16 trillion. A total impact of 0.5%.
