NAB has released its Q1 residential property survey, which showed that foreign buyer demand has rebounded, led by the new home market.
As illustrated in the below chart, foreign buyers’ share of new home demand surged to 7.9% in Q1 2022 from 4.6% in Q4 2021, and also has risen for three consecutive quarters to its highest level since mid-2020.
Foreign buyers’ share of demand for existing homes rose more moderately to only 2.5% in Q1 2022, up from 2.3% in Q4 2021.
Foreign buyer demand is increasing.
The rise in foreign buyer new home demand has been driven by New South Wales and Western Australia. New South Wales’ share (10.3%) hit a 4-year high, whereas Western Australia’s share hit its highest level since late 2016:
Big bounce in foreign buyer new home demand in NSW and WA.
Foreign buyer demand for existing homes was highest in New South Wales and Victoria in Q1 2022; albeit remained well below historical averages:
NSW and VIC lead foreign demand for existing homes.
Arguably, the biggest factor suppressing foreign buyer demand over the pandemic was the closure of Australia’s international border, since foreign buyers usually physically inspect homes before purchasing. The sharp reduction in international students would also have driven down demand, as would tighter domestic credit and increased restrictions on capital transfers in China.
Now that Australia’s borders are open, and immigration, international student and tourist flows have all resumed, foreign buyer demand should rise over the quarters to come.
