Overseas buyers are snapping up new properties across Australia, according to findings from the National Australia Bank’s Q2 2020 Residential Property Survey.
New development sales to foreign buyers rose from 6.6 per cent to 8.3 per cent in Q2, with figures for established housing increasing to 3.1 per cent from 2.4 in the first quarter.
Victoria has seen the biggest influx, with 19.3 per cent of new homes in the state selling to overseas buyers, the highest level in three years.
“Foreign demand – especially from China, India, and other parts of Asia – has always been a small but significant part of the Australian market, around 5 per cent to 7 per cent of existing sales and 10 per cent to 13 per cent of new sales,” explains Juwai IQI Executive Chairman, Georg Chmiel.
“Foreign buyers are a lifeline for developers who are having trouble selling to the local market because of COVID-19. They are also focused in certain suburbs, especially in the inner city and certain luxury areas.”
According to approval data from the Foreign Investment Review Board, Asian investors have put over $211 billion into Australian real estate in the last 10 years, with $125 billion of this coming from China.
“Chinese buyers made 40.1 per cent more inquiries on Australian real estate in the second quarter than in the first,” continued Mr Chmiel.
“This was still 14.9 per cent below the levels of a year earlier, which happened to be exceptionally high.
“Chinese demand for Australian real estate was surprisingly strong in the second quarter, especially if you consider the context of a global pandemic, travel bans, and lockdowns.
“During the first half, Chinese buying in Australia was down 14 per cent according to Juwai IQI inquiry data, but local buyer activity plummeted by some 40 per cent. In that respect, foreign buyers helped support the market at a time when the outlook was otherwise bleak.
“China is now the first country to emerge from the coronavirus downturn. Stimulus money and extremely low interest rates are flooding the system with cheap cash. Many Chinese want to purchase hard assets like real estate. Real estate purchases in China itself are soaring and the demand is spilling over the border into Australia, as well.
“Melbourne’s reign as the most popular city for Chinese buyers may be short-lived, however.
“We are very interested to see if Chinese buyers continue to pursue transactions in Melbourne while it is under lockdown over the next few weeks,” Mr Chmiel said.
“The pandemic has pushed the entire industry into a situation where it is able to market and sell property almost entirely without physical human presence. This technological advance is making it possible to sell to both local and overseas buyers even under lockdown conditions.
“This is something that almost no one would have predicted a year ago.”