The Foreign Investment Quarterly Report was released by Treasury last week, accompanied by a press release declaring an increase in buyers from throughout Asia and the United Kingdom, and a rise in the value of their purchases.
There is a common perception that foreigners are investing heavily in Aussie real estate which I wanted to investigate.
As per the recent report, buyers from China made up the greatest percentage of foreign property purchase applications- 67% in the June 2023 quarter. After China, buyers from Hong Kong, India and Taiwan also ranked, followed by the United Kingdom.
For the full 2022-23 financial year, the report revealed proposals and approvals around $4.3B with around 30% of those intending to purchase in Sydney. A separate NAB survey from the March quarter of this year found 7.9% of all new property sales (land and off plan apartments) were to foreigners.
In addition to buying as a foreigner with the purchase requiring approval from the Foreign Investment Review Board (FIRB), non citizens can also purchase property by becoming a temporary or permanent resident. Residency can be obtained via multiple streams- as a significant investor or a skilled worker to name a couple. Permanent Residents have no restrictions on property purchases and as they don’t have to apply to the FIRB their purchases aren’t tracked. It is not uncommon for these buyers to have access to pooled funds from family offshore.
Whilst there isn’t data to validate the transaction volume to permanent resident buyers, based on personal experience this is a substantial cohort. At least as large as the FIRB-tracked buyers, if I had to hazard a guess.
So perhaps there is some truth behind the perception that foreigners are a force to be reckoned with both in the number of properties they purchase and the buying power behind each transaction. Another reason we can expect tailwinds for our local property market.
That’s all for this week. If you have any questions, please do get in touch.
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