The number of foreign buyers has reached record levels in Victoria, where they accounted for 32.5 per cent of all new property purchases in the fourth quarter of 2014.
While foreign buyers were less prevalent in new housing markets nationally in Q4 – accounting for 14.8 per cent of buyers compared with 16.8 per cent in Q3 – one-in-three new homes in Victoria was purchased by a foreigner, according to NAB’s Quarterly Australian Residential Property Survey Q4 2014.
Nationwide, 53 per cent of foreign purchases were apartments, 31 per cent houses and 16 per cent were for re-development.
In Victoria, apartments made up 44 per cent of all foreign purchases, while foreigners bought more houses in that state (38 per cent) than in any other, the survey found.
The bulk of foreign buyers bought properties between $500,000 and $1 million, with 29 per cent purchasing properties under $500,000. Approximately five per cent of all sales were for premium properties over $5 million.
NAB Group Economics expects average city house prices to cool to around four per cent over the year to end-2015 and two per cent over the year to end-2016.
“Our assessment of the market remains that house price growth will continue to moderate because of rising unemployment, sluggish household income growth, affordability concerns, cost-of-living pressures and high levels of household debt,” the report said.
“We are also forecasting two further interest rate cuts of 25 basis points in March and 25 basis points in August 2015, bringing the official cash rate down to two per cent, which should support house prices a little more than previously expected.”
NAB expects Brisbane (5.7 per cent) and Sydney (4.1 per cent) to lead the market for capital growth to end-2015, followed by Melbourne (2.7 per cent), Adelaide (2.1 per cent) and Perth (1.8 per cent).