Tougher restrictions on foreign investment do not appear to be strong enough to halt foreigners from dipping their hands in the Australian housing markets, especially in Victoria.
The latest figures from the National Australia Bank (NAB) have revealed that Victoria, among other states in the nation, has heightened numbers of foreign property investments. These investors have increased their slice in the market to 8.6% during the June quarter, up from 7.5% in the three months to 30 March.
This latest survey is also the first time NAB has started to distinguish between foreign buyers in the apartment and housing markets.
NAB found in its quarterly property survey, however, that foreign buyers of Australian houses are decreasing in the second quarter of this year. The demand for new property among foreigners fell to 12.8% from 15.6% in Q1 across Australia.
In Melbourne alone, more than 28% of all new apartments were bought by foreigners, while New South Wales saw 16.5% sales from foreign investors.
Sales of established apartment and homes among foreigners made up 11.4% and 9.4% of buyers respectively, over the three months to 30 June.
“It was however notable that foreign buyers had a much bigger presence in the established housing market in Victoria, with a market share of just over 16%,” NAB chief economist Alan Oster said. “This was much higher than in all other states.”
Meanwhile, a Motley Fool report – which was based in the same NAB figures – stated that “one in six new properties are being bought up by foreign, mostly Asian, mostly Chinese … and that is expected to rise even higher. One in eight existing homes is also going into foreign hands”.
The report also stated a number of reasons why many overseas buyers are looking at high-end apartments, including the following:
- The falling Australian dollar means our houses and properties are cheap.
- Many Chinese have family connections in Australia.
- For personal use, such as sending their kids to university or school here.
- Restrictions imposed on Chinese property investment forcing a rising middle class to look outside the country for investments.
- Plunging Chinese stock markets mean investors are looking for more stable investments.
- For many Chinese, buying property in a foreign country is more like an insurance policy, so they are willing to pay whatever price they need to secure a property they want.
- Reports that a lack of anti-money laundering laws around property purchases make it easier for money laundering to take place.
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