We’ve all read (and some of us have written) plenty about the unprecedented levels of interest Australian real estate is currently generating among overseas property buyers.
Some feel this issue has been exaggerated by a handful of scaremongering social advocates. But when you consider that selling our home grown bricks and mortar to international investors is a niche market worth tens of billions of dollars, it certainly gives pause for thought…don’t you think?
Top of the charts
The annual report of the Foreign Investment Review Board (FIRB) revealed approvals for housing investment reached a record $61 billion in the 2014/15 financial year.
This represents a massive increase of 75 per cent from the previous year, which was already up by 102 per cent from the year before that!
This data of course only accounts for approvals, so the actuality of how much new housing stock that trickles through the supply pipeline can be attributed to foreign buyer activity is difficult to gauge.
But when you check out the chart plotted by UBS economists George Tharenou, Scott Haslem and Jim Xu, based on the FIRB report, the sharp rise in overseas investor activity over recent years is hard to miss.
FIRB’s annual report states that “At $49bn in 14/15, new (housing applications) represented an 81% share of the total (of which a 75% share of new was in NSW and Victoria alone.)”
Further, of the $60bn total recorded residential building approvals from the ABS for the last financial year, 82 per cent were attributable to foreign investment.
The report notes however, given the past proportion of approvals that actually ‘transact’ into sales is around 1 in 3, this figure is more likely to be around 30 per cent…although it’s thought to be much higher for CBD apartment stock.
Essentially, it seems that at least one-third (and likely a lot more) of the latest OTP apartment frenzy across our major eastern seaboard cities can be directly attributed to foreign buyers. Did someone say ‘bubble’?