Foreign buyers of new residential property have doubled in two years: NAB survey

The proportion of new houses and apartments being purchased by foreign buyers has doubled in the space of two years.

Foreign buyers now account for between 12% and 13% of all new residential property purchases, according to the views of around 300 property participants surveyed as part of the June quarter NAB residential property index.

This is up from foreign buyers accounting for around 5% to 6% of buying activity in much of 2011, previous NAB surveys have found.

Queensland (20%) and Victoria (14.1%) remain the choice locations for foreign investors followed by NSW (above 10%).

While not stated in the survey, many of the offshore buyers would be purchasing apartments off-the plan in new developments in Melbourne, Brisbane, the Gold Coast and Sydney.

“Asian investors (mainly Chinese) have been driving this trend according to the latest data from the Foreign Investment Review Board, says NAB chief economist Alan Oster.

“A number of factors are driving Chinese investment into Australian property, including initiatives to curb real estate speculation in China, diversification for Chinese property investors and immigration potential.”

The latest quarterly survey found that resident owner occupiers remain the biggest players in the new property market, but their share of total demand has slipped to 36% in the June quarter.

The share of first home buyer activity in the market was broadly unchanged at just over 20%.

In contrast, demand for new property from Australian resident investors climbed to 27% in the June quarter, with investment demand especially strong in Victoria (34%) and Queensland (26%).

“We suspect that the relative low yields offered by fixed interest and continuing equity market volatility may be helping to boost investment demand,” says Oster.