Foreign buyers account for less than 2 per cent of all property purchases in Australia, but the impact on prices is likely to be measurable as they target mostly inner city apartments and expensive properties in Sydney and Melbourne, with Brisbane starting to attract interest, a new report says.
The fall in the Australian dollar will make local property more affordable for overseas buyers and interest is likely to increase, a report by Propell National Valuers says.
Australian property prices are cheap compared to most cities in Asia, with Melbourne CBD prices on par with Kuala Lumpur, 50 per cent cheaper than Sydney, 350 per cent cheaper than Hong Kong, and 550 per cent cheaper than London.
"Foreign buyers are here to stay. Their impact is in defined markets. Rather than complaining about them, domestic buyers might do better to deal into the game and buy into the same market on the assumption that price growth will be stronger in those markets that attract foreign buyers," Propell said.
Overseas buyers mostly come from China, Canada and the USA, and Melbourne approvals were double those of Sydney, it said. It added that Australia already has tighter restrictions on foreign buyers than most countries.
House prices are likely to continue to increase in the next year, it said. It forecast a 10 per cent rise in Sydney and 7 per cent increase in Melbourne.