Some of the increase in foreign demand for Australian housing may have spilled over into price increases, especially for higher-priced dwellings, according to the Reserve Bank of Australia.
In its quarterly bulletin, the bank noted Foreign Investment Review Board data showing that the average price for approved foreign home purchases have consistently been much higher than the average sales price nationally for both new and established homes.
FIRB data also shows the value of approved foreign investment in residential property in Australia rose to more than $17 billion in 2012-13, up from around $6 billion annually in the 1990s, driven mainly by approvals for new dwelling purchases, the RBA said.
The RBA said foreign residential demand has also probably resulted in an increase in the supply of dwellings and stimulated construction activity.
But the RBA warned that foreign residential purchases have been relatively steady and fairly low as a share of turnover and are unlikely to have been the main driving factor behind the recent increase in prices.
The central bank also said the degree of competition between local first home buyers and foreign buyers is still likely to be fairly small.
But the RBA warned that data on foreign purchases are limited.