Foreign nationals have slashed $1bn from their spending on Aussie homes in the past year, the vast majority of the plunging figures caused by falling demand from China.
And the head of the nation’s top housing lobby group has warned the loss of foreign capital could be a major concern for government plans to build the nation out of its housing crisis.
In the past financial year offshore buyers spent $6.6bn on residential property around the country, with 5581 sales covered by the sum.
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In the previous year that figure was $7.9bn from 6576 transactions, and in the 2021-2022 financial year the spend was $7.6bn across 5433 purchases.
The FIRB stats released this month also show commercial real estate transactions have been cut in half in the past financial year, plunging from $50.2bn to just $23.3bn. The figure was more than $63bn in the 2021-2022 financial year.
Buyers from mainland China were the biggest spenders on Australian homes, shelling out $2.6bn across 1998 purchases nationwide.
The data revealed in FIRB’s latest report shows who the biggest investors in Aussie homes are, and how much they’re spending.
But it’s well below the $3.4bn they spent on 2601 homes in the 2022-2023 financial year.
Real Estate Institute of Australia president Leanne Pilkington said it wasn’t a surprise to see China pulling back, given the nation’s ongoing property industry problems at home.
One of the nation’s biggest developers, Evergrande, collapsed early in 2024.
But with property experts nationwide warning that Australia needs more foreign capital to bolster its housing supply and address an affordability crisis, Ms Pilkington said the reduction was cause for concern.
“This is certainly not ideal,” she said.
Ms Pilkington added that the huge reduction in international spend on commercial property was also unsurprising as she was hearing anecdotally that Australia’s pivot to a more work-from-home friendly environment was leaving the commercial market in an adjustment phase around major capitals including Melbourne and Sydney.
A $400m spend on 409 homes made by Hong Kong-based investors was the second biggest figure recorded, followed by Taiwan and Vietnam with similar amounts of money spend though on fewer homes.
The amount of money being spent on Australian homes from offshore investors has plunged more than $1bn in a year.
There were 550 transactions approved for Indian investors, worth a combined sum that was also close to $400m.
Residents of Nepal, Indonesia, the United Kingdom and Sri Lanka rounded out the 10 biggest spenders on Aussie homes in the three months to June 30.
The decline in transactions comes after May 1 changes to streamline and strengthen the framework around foreign investment in Australia, including boosting the government’s ability to impose conditions on investment, to prohibit an investment and even to unwind transactions if it deemed there were issues relating to Australia’s national interest.
Latest realestate.com.au data shows that residents of the UK and New Zealand looked at the most homes on their website in June, followed by the US which has since surged to top spot in July.
Searches coming out of China have declined, though analyst Karen Dellow noting there had been an overall 3 per cent lift in international searches for Australian homes in the past year in their latest figures.
It is believed that Melbourne is attracting the largest share of foreign investment in residential property. Picture: Jason Edwards.
Separate figures from Juwai.com, an online portal for international real estate, show that Melbourne had attracted 30 per cent more inquiries coming out of China than Sydney in 2023. A year prior it was 17 per cent.
Perth was next on the list, followed by Brisbane and Adelaide.
However, Juwai IQI co-founder Daniel Ho said most of the parties they encountered indicated they were looking for a home for their own use, suggesting foreign investors interest in Australia was now almost non existent compared to its peaks in 2014-2018.
Mr Ho added that he believed the reduction in purchases out of international buyers recorded by FIRB was coming as a result of affordability — with some international banks offering interest rates two percentage points higher than Aussie lenders.
“And foreign buyers pay much more to purchase and to hold property in Australia than local residents and citizens,” he said.
“They have extra taxes, fees, and duties that local buyers don’t have to worry about. Even the interest rates they pay on their mortgages are higher because they can’t borrow from the big four banks.”
Mr Ho added that the decline was even more pronounced long term, with $8.4bn approved by FIRB in the past three years — compared to $126.2bn in the decade to June 30, 2021.
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