Foreigners are purchasing property at an annualised rate of $8bn per year, equal to 25% of new supply in New South Wales (NSW) and 16% in Victoria.
These figures come from research completed by Credit Suisse analysts Hasan Tevfik and Peter Liu using data obtained under a freedom of information request from the state revenue offices of both states.
“The data is new and is available because state governments now collect taxes from foreign buyers,” they wrote in a research note on Thursday (23 March).
The research reveals a staggering percentage of foreign buyers are from China, which includes buyers from Hong Kong, Macau and Taiwan, as well as the mainland.
“The Chinese have accounted for almost 80% of foreign demand in NSW. The second biggest group, the Indonesians, account for just 1.7% of foreign demand.”
There is little evidence that the inflow of foreign buyers has stopped, they wrote, despite the numerous restrictions set in place recently by the Chinese government as well as Australian lenders.
“The taxes collected imply foreigners are currently purchasing an annualised $4.9bn of New South Wales housing and $3.1bn in Victoria,” the analysts wrote.
From October 2016 to January 2017, there were more than 1,500 properties settled involving foreign buyers in NSW with a total of $1.63bn in value. Chinese buyers settled on 80% of these (more than 1,200 properties) and accounted for 77% of the total purchase value.
Tevfik and Liu also found that foreign buyers were still easily meeting their settlement obligations in both states despite a tighter lending environment.
“In New South Wales there were $225m of foreign settlements in October 2016 and this rose to more than $450m in both November and December. In Victoria, the value of December settlements was 50% higher than in November.”
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