Despite tighter foreign investment rules, foreign buyers are snapping up existing Australian property at a faster rate.
A few months ago, the federal government announced new measurers to make it harder for foreigners to get into the local housing market, but according to NAB, it hasn’t halted activity just yet.
NAB’s latest Residential Property report reveals total foreign demand for new homes decreased from 16.1 per cent to 12.8 per cent in the June quarter.
Foreigners, however, have increased their share in existing housing markets from 7.5 per cent to 8.6 per cent.
NAB Chief Economist, Alan Oster says of all established property sales, foreigners purchased 11.4 per cent of available apartments, with most of them in Victoria.
“Increasingly what we are seeing is more signs that foreign investors are actually buying existing stocks. In some cities, in Melbourne it was 16 per cent of the existing stock, in Sydney it was 10 per cent and in the other cities it was much lower.”
And many of those dwellings won’t be occupied, he added.
“What you’ve got, is quite wealthy Chinese looking for a ‘bolt-hole’, somewhere they can put their property as an investment, particularly in the apartment market. Probably 20 per cent of them aren’t going to turn the lights on – it’s a long term play. They’re basically saying this is a good investment for the future, I don’t care if I don’t get any yield in the short term.”
From December 1 this year, non-resident buyers will have to pay a fee of $5,000 to buy property under $1million. $10,000 will be added for every $1million thereafter.
In Victoria, a three-per-cent stamp duty for foreign buyers was imposed from July.
Senior Director at property developer CBRE Mark Wizel says however, many Chinese investors are diversifying, spending as much as $5million on commercial properties.
“The average Chinese investor is probably also looking at smaller commercial properties as opposed to just residential apartments. So we’re seeing a really big uptick in enquires from Chinese investors wanting to spend between $1million and $5million. There seems to be a preference at the moment for them to be buying small shops, small office buildings and small industrial properties, as opposed to buying straight apartments off the plan.”
As for Australian property buyers and mortgage holders, official interest rates are likely to remain on hold for some time.
Reserve Bank Governor Glenn Stevens said today he remains open to further rate cuts if warranted but, he’s surprised at the strength of the employment market.
Adding to the case for a hold in interest rates, there’s today’s official inflation report.
The underlying measure, which the RBA tracks, came in at the bottom end of the central banks’ two-to-three per cent target band, at 2.2 per cent for the year.
Petrol was the biggest contributor to the upside for the three months to June, up 12.2 per cent. Interestingly new dwelling purchases by owner-occupiers rose by 1.5 per cent.
The most significant offsetting price falls were domestic holiday travel and accommodation – down 5.4 per cent – and pharmaceutical products, which declined by 1.8 per cent.
Article From SBS