Australia and New Zealand Banking Group (ANZ), drawing on data from the Reserve Bank, estimates that foreign investors purchased between 35,000 and 60,000 dwellings in Australia in 2015-16.
This means foreign buyers accounted for roughly 7%-13% of all property transactions during this period, with the proportion of ownership being much higher in regions popular with foreign investors and much lower in others.
Using data from the Foreign Investment Review Board (FIRB), ANZ estimates that foreign investors bought between 30,000 and 50,000 new dwellings in 2015-16, representing between 15% and 25% of newly-constructed homes.
“Foreign demand is clearly one of the drivers of the strength in our dwelling investment profile,” said Daniel Gradwell, economist at ANZ. “If this demand were to dry up suddenly, Australia's construction pipeline would likely be notably weaker than currently expected.”
If foreign buyers are buying around 25% of new apartment stock, this suggests approximately 80% of foreign purchases are apartments, with the remaining 20% being houses.
In contrast, foreign buyers represent a lower share of total market activity, at a mere 7% to 13% of turnover.
“The purchase of 7–13 per cent of total sales each year is not as significant as the share of new construction,” Gradwell said. “So the impact on overall prices is likely to be less than the impact on construction.”
Foreign buyers own between 2.5% and 4% of Australia’s housing stock, and though their ownership levels are significant, Gradwell said it would likely take a major exodus of foreign buyers to precipitate a substantial fall in home prices.
“Around 5 per cent of Australia's housing stock is bought and sold each year,” he said. “This means that only a large shock, causing a high share of foreign owners to sell their Australian property, would be significant enough to drive sale prices lower.”
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