The number of foreign buyers snapping up Australian property has taken a significant hit, new figures show, but those that are buying here are much more likely to stay for the long term.
New Foreign Investment and Review Board figures reveal overseas spending on Australian homes dropped from $8.5 billion in the 2017-2018 financial year to $6 billion between in 2019-2020, after three challenging years for Australia’s property market.
Foreign investment rule changes, the Financial Services Royal Commission and the pandemic all impacted buyer numbers, but experts say the market should turn around this year as Australia’s borders reopen and international students and new migrants return.
While total investment fell in financial terms, FIRB figures also revealed the number of property transactions dropped from 10,491 in 2017-2018 to 7482 in 2019-2020.
Foreign home buyers that were still buying were most likely to purchase a property in Victoria, NSW or Queensland, according to the FIRB, with data showing 88 per cent bought there in 2019-2020.
About 85.6 per cent of the properties bought were new dwellings or vacant land, with figures also showing 79 per cent of properties bought by overseas buyers were priced under $1 million.
AMP Capital chief economist Shane Oliver said the figures were surprising, given foreign buyers had been securing expensive mansions in sought-after suburbs around Double Bay in Sydney or Toorak in Melbourne, or inner-city apartments for their children who were studying in Australia.
“Because of the high-profile crackdowns on foreign investors, to force some buyers to divest [sell], that’s most likely had a dampening impact at the top end of the market,” Dr Oliver said. “It suggests that these buyers are new migrants who want to come here and live. That’s a real positive to come out of this, that buyers are more committed to staying in Australia.”
Global real estate group Juwai IQI’s managing director, Daniel Ho, agreed those buying properties in Australia were now more likely to stay long-term, especially as FIRB sales figures showed only 1957 properties, valued at $1.5 billion, were sold by foreign investors in 2019-2020, down 19.5 per cent on the year before.
The figures show foreign transactors were four times more likely to buy property in Australia than sell, Mr Ho said.
“These are not speculative buyers who flip the homes. In many cases, they are buying property to pass on to the next generation.”
Mr Ho said while foreign buyer numbers were also down, he expected the market would see an uptick by the end of the year.
“In the second half of 2022 we expect stabilisation and even a modest uptick in foreign buying,” he said.
“Foreign students are returning, international travel is restarting and inbound immigration is rebooting. Foreign buying will have multiple drivers pushing transactions up by the end of this year.”
Ray White Double Bay China Desk sales executive Janette Chan said while overseas buyers were not rushing back, she also expected the market to pick up again once the number of positive cases from the Omicron strain of COVID-19 had fallen.
Ms Chan expected the market would start to return to normal as students, currently undertaking some classes online, returned to Australia to study.
“We have seen signs that people are making plans for migrating or are already returning to Australia,” she said.
Sydney Sotheby’s International Realty director, Michael Pallier, said foreign buyers were not as keen as expatriate buyers, who were coming back in large numbers to buy property in Sydney.
“I have had a massive number of expats. They have really replaced new migrants since COVID-19,” he said. “It’s been a bigger market than ever, including this year.”
Some were planning ahead, buying property that they would move into in a few years’ time.