House prices have risen by double digits in key cities where foreigners have been snapping up property, latest data reveals.
Sales of new build homes to overseas buyers hit a six-year high in late 2023, with Sydney and Perth values soaring over the past year.
Prices in those states with the highest foreign interest have continued to rise despite the most aggressive interest rate increases in a generation.
Commonwealth Bank Australian economics chief Gareth Aird said more foreigners were buying real estate as strong population growth drove up prices.
“Foreign buyers are more active in the market,” he said.
House prices have risen by double digits in cities where foreigners have been buying property more actively (pictured are houses under construction in Oran Park, in Sydney’s outer south-west).
Foreigners who do not live in Australia can only by law buy newly built new properties.
But international students can buy a place to live while they study, as long as they sell it within six months of graduating and returning home.
Sydney, which receives a higher proportion of foreign migration, saw its median house price rise by 11.7 per cent in the year to February, sending it sky-high to an even more unaffordable $1,395,804.
New data from CoreLogic, released Friday, showed that apartment values rose to $837,253, a 7.8 percent year-over-year increase, to a level that is unaffordable for a median earner with a salary of $98,218. .
Foreign buyers are primarily targeting homes in New South Wales, with overseas investors taking a 15 per cent market share in the December quarter. This was shown by the National Australia Bank residential survey.
Mining-rich Western Australia was next, with foreigners holding a 14.2 per cent market share.
Both were well above the national average of 11 per cent of new properties bought by foreigners in the December quarter.
The proportion of foreign buyers rose for the fifth consecutive quarter to a six-and-a-half-year high, with transactions now five times higher than in 2021 during the Covid border closures.
“The overall result suggests there has been a nearly five-fold increase in the market share of overseas buyers in new Australian local markets since hitting a low of just over two per cent during the Covid pandemic in mid-2021.” , says the NAB report.
This came after net overseas migration hit a record 518,000 in 2022-23, during a time of rising construction costs.
“The recovery has come amid record migration and reports that China’s post-pandemic reopening has sparked a surge in foreign interest in Australian housing, with international agents reporting a rise in inquiries of more than 400 per cent. “NAB said.
“Higher construction costs and rates are still seen as the main barriers to starting new housing projects in Australia.”
Perth has been Australia’s best-performing capital market over the past year, with the median house price rising 18.6 per cent in the year to February to $718,560.
Australia’s capital’s most affordable apartment market also saw its median unit price rise 15.9 per cent to $482,972.
New South Wales is also the state of choice for foreign buyers, with foreign investors holding a 15 per cent market share in the December quarter, National Australia Bank’s residential survey showed (pictured, potential buyers in Sydney).
In Victoria, foreigners had less than a 10 per cent share of the new housing market.
Melbourne’s median house price rose a more moderate 4.4 per cent over the year, to $942,779.
But the link between more active foreign buyers and rising house prices is limited, and interstate migration is also a factor.
The median house price in Brisbane soared 15.7 per cent in the year to February to $899,474.
But in Queensland, foreigners have a much smaller 6.3 per cent share of the new housing market.
Treasurer Jim Chalmers and Housing Minister Julie Colllins last month announced tax increases for foreigners buying property.
Juwai IQI, which markets property to wealthy Asian investors, said foreigners were now waiting to become permanent residents so they could buy a home without having to seek approval from the Foreign Investment Review Board.