Foreigners are snapping up one in five new properties sold in NSW and Victoria, but contrary to popular belief, they’re not just buying the expensive stuff.
Foreign buyers have been blamed in recent years for inflating property prices, particularly in Sydney and Melbourne, and pricing first-home buyers out of the market.
But many economists have sought to pour cold water on those claims, saying foreigners tended to buy new and expensive properties, shopping in a completely different market to first-home buyers.
New figures from National Australia Bank on Tuesday reveal that’s not the case – around 70 per cent of all sales to foreign buyers were below the $1 million mark in the first quarter of this year.
In Queensland, around 85 per cent of sales were below $1 million, while in NSW, almost 60 per cent were sub-$1 million, NAB’s quarterly residential property report shows.
Most foreign buyers are shopping at the lower end of the market, with 41 per cent buying properties between $500,000 and $1 million, while 30 per cent bought properties worth less than $500,000.
Only five per cent of foreign investor purchases were for premium properties worth more than $5 million.
The report contradicts the idea that foreign investors and first-home buyers shop in different markets, NAB senior economist Robert De Iure says.
But that doesn’t mean first-home buyers are being priced out, he said, with first-home buyers accounting for one in four sales – 15 per cent being owner-occupiers and 10 per cent being investors.
“They’re certainly competing in the same market, but whether or not they’re pricing them out of that market, I don’t know whether you could say that for certain,” he said.
NAB expects national house price growth of 4.4 per cent by the end of the year, with Sydney leading the charge at 7.7 per cent growth, as loan approval figures suggest the “very strong investor market is unlikely to pull back any time soon”.
SUBURBS TIPPED FOR ABOVE AVERAGE CAPITAL GROWTH
* NSW – Blacktown, Campbelltown, Castle Hill, Eastwood, Kellyville, Marrickville, Parramatta, Penrith, Schofields, Surry Hills, Sydney, Ultimo
* VIC – Box Hill, Brighton, Melbourne, Richmond, Thornbury, Ringwood, Toorak, Werribee
* QLD – Brisbane, Gold Coast, New Farm, Paddington, Sunshine Coast, Toowoomba, West End
* WA – Armadale, Baldivis, Bentley, Cockburn, Forrestfield, Perth, Scarborough
* SA – Prospect
* TAS – Sandy Bay