In NSW last year, 11% of home buyers were foreigners. But is 11% a big number? What sort of effect on price could that much foreign buying have?
What we know for sure is that 11% of buyers does not mean that the presence of foreign buyers has made prices 11% higher. The price effect could be lower, or far higher. I suspect higher.
One trick to understanding the price effect of additional buyers in the housing market is to understand that potential buyers can affect prices without ever buying a home. It doesn’t matter if the extra buyers are foreigners, or investors funded by loose lending. In all cases, not only do the extra buyers who end up buying a home affect prices, but so to do other new buyers who didn’t end up buying.