You've heard about the force-sell of a $39 million mansion last week, but what are most foreign investors really looking for?
You have probably heard about last week’s controversial move by Treasurer Joe Hockey for a Chinese billionaire to force-sell his $39 million Sydney property.
But mansions aside, we take a look at what the majority of foreign investors are looking for in the Australian property market.
A quarterly property survey from National Australia Bank revealed a great deal about what types of property, price ranges and locations have been most sought after by foreign investors.
1. Foreign buyers are buying less​
At a glance, although 10% of all property purchased by first home buyers was purchased as an investment, the survey showed foreign buyers have made fewer purchases in new property markets in all states, except for Victoria. Here they snap up an entire third of new property sales. Alan Oster, NAB Group chief economist, said, “Foreign buyers accounted for 14.8% of total demand for new property in Q4, down from 16.8% in Q3.”
2. Foreign investors are seeking out apartments​
Foreign investors clearly have their eye on apartments, as over half of all transactions by foreigners were to purchase apartments. A third of their transactions were for house purchases, and the remainder for house and/ or land redevelopment. All states followed a similar trend of highest purchases for apartments, then houses, and then redevelopment cases.
However, Oster said “apartments made up just 44% of all purchases in Victoria, compared to between 54% and 57% in the other states, with foreign buyers purchasing more houses in Victoria (38%) than any other state”.
3. Foreign buyers are looking for properties under $1M
Looking at the most popular price range for foreign investors, the survey tells us that 70% of all foreign purchases were for properties under $1m (40% were for properties worth between $500,000 and $1m, and 29% below $500,000), and just 5% of transactions were for more than $5m.
The NT and SA stood out, with half the properties bought by foreign investors in these states for below $500,000, which is to be expected as average housing prices are lower in these states.
Looking ahead, NAB predicts house prices will cool over the next two years.
But mansions aside, we take a look at what the majority of foreign investors are looking for in the Australian property market.
A quarterly property survey from National Australia Bank revealed a great deal about what types of property, price ranges and locations have been most sought after by foreign investors.
1. Foreign buyers are buying less​
At a glance, although 10% of all property purchased by first home buyers was purchased as an investment, the survey showed foreign buyers have made fewer purchases in new property markets in all states, except for Victoria. Here they snap up an entire third of new property sales. Alan Oster, NAB Group chief economist, said, “Foreign buyers accounted for 14.8% of total demand for new property in Q4, down from 16.8% in Q3.”
2. Foreign investors are seeking out apartments​
Foreign investors clearly have their eye on apartments, as over half of all transactions by foreigners were to purchase apartments. A third of their transactions were for house purchases, and the remainder for house and/ or land redevelopment. All states followed a similar trend of highest purchases for apartments, then houses, and then redevelopment cases.
However, Oster said “apartments made up just 44% of all purchases in Victoria, compared to between 54% and 57% in the other states, with foreign buyers purchasing more houses in Victoria (38%) than any other state”.
3. Foreign buyers are looking for properties under $1M
Looking at the most popular price range for foreign investors, the survey tells us that 70% of all foreign purchases were for properties under $1m (40% were for properties worth between $500,000 and $1m, and 29% below $500,000), and just 5% of transactions were for more than $5m.
The NT and SA stood out, with half the properties bought by foreign investors in these states for below $500,000, which is to be expected as average housing prices are lower in these states.
Looking ahead, NAB predicts house prices will cool over the next two years.
