Foreign property investors unperturbed by border closures – at least in 2021

Can they stand the test of the Omicron variant?

Foreign property investors unperturbed by border closures – at least in 2021


By Micah Avry Guiao

The closing of borders did little to thwart foreign investors from gobbling up the Australian property market in 2021.

According to Australia’s Foreign Investment Review Board, the total number of residential properties with a level of foreign ownership totalled 7,482 with a value of $6 billion from when the country closed its international borders in March 2020.

New South Wales, Victoria and Queensland accounted for 92.1% of the total purchases, with the longest-locked-down city of Victoria outperforming its neighbours with 3,215 properties. It was a far cry from New South Wales’ 1,950 and Queensland’s 1,416.

However, looking at the statistics from a macro picture is an entirely different matter. Foreign investment went down by 80% since it peaked in 2015-2016, especially after Chinese investors – who make up a large part of foreign homebuyers – pulled out of the market when tensions rose between Beijing and Canberra over trade disputes in 2020.

According to Real Capital Analytics (RCA), Australian property investments from Chinese state-owned and private enterprises alone reached $935 million in 2019. This fell to $664 million in 2020 and $22.7 million in the first quarter of 2021.

Some experts have also expressed concerns over the possibility of stricter border controls and foreign investment regulations as the country grapples with the Omicron variant. Despite record cases, Prime Minister Scott Morrison said lockdowns are a thing of the past, which would mean continued foreign activity.

Still, Martin North, principal of Digital Finance Analytics, said the previous highs of 2015-2016 cannot be expected anytime soon.

“I don't see the naked investment we had, say, five years ago, particularly from the South-East Asian nations, being the same again," North told the ABC. “The world has changed, the political landscape has changed, the financial landscape has changed.”

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