Foreign buyer activity is on the rise with buyers buying up new property investments — a trend that is only expected to increase in the coming months.
For those seeking home loans in upcoming months, this is sure to be of interest.
The desire to buy real estate is strong, and foreign buyers are no exception to this rule. In fact, they made up 16.8 percent of overall demand for new property during the third quarter — approximately one in six buyers — according to NAB‘s Quarterly Australian Residential Property Survey.
Looking back to the third quarter of 2011 – foreign buyers only made up a share of around five percent nationally.
Foreign buyers head east
The eastern state of Victoria is a hotspot for foreign investors, according to NAB‘s findings.
“Foreign buyers were more active in all states, but especially in Victoria where they accounted for an estimated 24.8 percent of total demand, or one in four all new property sales” said Alan Oster, NAB Group Chief Economist.
It’s expected that demand for real estate among foreign buyers will soar over the coming months. While they currently make up 16.8 percent of existing demand, it’s expected this proportion will rise to 17.3 percent next year.
Local investor numbers dip
While foreign buyers are taking out investor home loans in droves to secure property, the same isn’t quite true for domestic investors.
Local investor demand fell by over five percentage points, between the second and third quarters, from 32.5 percent to 27 percent.
However, this figure is ahead of foreign investment. Along with existing homeowners and first-time buyers, there could well be some fierce competition in the market.
The hottest areas for real estate purchases
NAB highlighted areas set for “above-average capital growth” in the future, with a range of locations across Australia set to enjoy favourable growth.
In the west, this includes the likes of Armadale, Baldivis, Cannington, East Victoria Park, Forrestfield, High Wycombe, Joondalup, Mandurah and Midland.
In the Northern Territory, the capital city of Darwin’s growth prospects look promising. South Australia’s Mile End and Norwood should experience above-average capital growth, while Ashgrove, Brisbane, Noosa and Toowoomba are some of the Queensland areas tipped for solid growth.
Investors buying property in Blacktown, Cambelltown, Chatswood, Oran Park, Penrith or Sydney may find their investments do well. Those looking further south than these New South Wales locations may wish to investigate Victoria — from Footscray to South Melbourne, there are numerous areas set for strong capital gains.
Just remember, whether you’re buying or investing, using a home loan calculator is always a smart move.