Foreign property buyers off the boil

The NAB quarterly property survey is out (it canvasses property sector insiders) and it’s still all go in the east:

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The NAB Residential Property Index rose to +21 points in Q1’15, up from +12 points in Q4’14 and sits comfortably above its long-term average (+14 points). Market sentiment improved in all states (except WA), although it continues to vary significantly across states. Overall sentiment remains strongest in NSW (+42 points), followed by VIC (+36 points) and QLD (+33 points). Sentiment improved in SA/NT but was still negative (-5 points), and unchanged in WA at deeply negative levels (-34 points). NAB’s Residential Property Index is expected to rise to +36 points next year and +41 points in 2 years time. Property professionals in QLD and VIC continue to be most optimistic, while those in WA are most pessimistic, although less so than in Q4 (especially in 2 years time).

Of most interest in this survey is the foreign buyer component, being one of the only sources of data we have. On that front developments are quite interesting with Victorian demand growth for new builds falling sharply:

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Demand for new properties by buyer Foreign buyers overall were more active in new housing markets, accounting for 15.6% of demand (14.8% in Q4’14). There was however a notable shift in activity by location with the share of foreign buyers in NSW rising to a new high of 21% (14.9% in Q4’14) and falling to 20.7% in VIC (32.5% in Q4’14). FHBs still accounting for around 1 in 4 of all new property sales, but share of demand from FHBs (owner occupiers) fell to 14.7% while FHBs (investors) reaches 10.1%. Owner occupiers broadly unchanged at 33.1%. Investors down slightly to 24.1%.

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Type of Property Purchased by Foreign Buyers Nationally, 53% of foreign purchases were for apartments, 30% houses and 17% for re-development. Apartments made up 48% of all purchases in VIC, compared to 58% in NSW. In contrast, foreigners buying more houses in VIC (34%) and QLD (32%). More than 1 in 5 foreign purchases in WA for re-development, just ahead of VIC (19%).

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Price Range of Property Purchased by Foreign Buyer The bulk of foreign buyers (41%) bought properties between $500k to <$1 million, with 30% buying properties less than <$500k. Around 5% of all sales were for premium property (+$5 million). There are still some notable differences between states. Around 85% of sales in QLD were sub-$1mn, compared to 58.5% in NSW. In contrast, 41.5% of all sales in NSW – where median house prices are the highest in Australia – were in the $1-5mn range.

Existing property demand growth has also reversed sharply in VIC and QLD but not so much in NSW:

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Foreign buyers are off the boil. Full report.

Comments

  1. pyjamasbeforechristMEMBER

    Is GMA worth shorting as the housing bust starts to appear?

    Any issues I am not seeing?

    Timing obviously is another question

    • http://news.domain.com.au/domain/real-estate-news/fears-about-foreign-investors-buying-australian-real-estate-are-misplaced-20150420-1mnjee.html?rand=1429577050287

      Not to mention this little gem.

      “The apparent influx of foreigners snapping up Aussie real estate is also topical. In fact, these concerns are often connected, with many media commentators claiming foreign demand for real estate is pushing up real estate prices.

      The truth is somewhat different. Australia has strict rules limiting what types of residential property foreign investors can buy. Investors who are not citizens or permanent residents must seek approval from the Foreign Investment Review Board (FIRB), and at present they cannot buy existing property (except for gaining an approval to build multiple dwellings). “

      • And how did NAB present about 30% of houses bought by foreigners? Is this statistic a lie or actually the best prove that those foreigners are breaking the law/rules?

        And miraculously the demand for established properies from foreign investors has dropped. How could be any such demand if there are rules or legislation banning this type of transactions for foreigners? How could NAB even publish this statistics? It is damn proving that all people in the government are morons.

  2. Off the boil? lol
    The NAB data indicates in the last year about 40,000 existing Australian dwellings were purchased by foreign nationals.
    The FIRB approved 5018.

  3. I find it surprising given that the AUD has fallen significantly in that time giving foreign buyers an e.g. Chinese buyers an effective discount.

    • Depends on whether Chinese buyers care about seeing their investment gains being wiped out by currency movements, and whether they think the Aussie has hit bottom.

    • Seems fair.

      A lot of latent heat required to move water from liquid at 100 C to gas at 100 C.

  4. “Share of demand for existing properties from overseas buyers”.

    I thought that was illegal under the FIRB rules
    (yes I know they aren’t enforced but even so, is it really that blatant?)

  5. As expected, the majority are buying in the 500k to 1 mil range that would otherwise be bought by FHB. We have been hearing all along in the media that they only buy super deluxe mansions etc that no one else could afford anyway…….

    I don’t understand why they hang around the lower range stock and blow locals away by paying 100k over value rather than competing for the premium stock that would be more deserving of their budget….the enjoyment of acting a big fish in a little pond perhaps

  6. 1
    Homebush $1,287,000 +42%

    2
    Canley Vale $648,000 +34%

    3
    Ryde $1,200,000 +32%

    4
    Burwood $1,650,000 +31%

    Yep, completely off the boil when you look at YOY Growth

    But i’m sure it’s not foreigners buying in Burwood, Ryde and Homebush because then your article would be way off