Demand from overseas investors for Australian commercial and residential property is helping offset the impact of high interest rates on domestic buyers. Asian and European investors see Australian real estate as a secure investment, but supply excess is leaving a lot of residential property languishing on the market. See the following article from Property Wire for more on this.
European and Asian investors are buying up residential and commercial property in Australia as high interest rates are putting off national buyers, it is claimed.
In Sydney in particular a surge of overseas buyers is driving demand in the CBD, North Shore and Eastern Suburbs, according to the Real Estate Buyers Association of Australia.
The most recent figures from the Federal Government’s Foreign Investment Review Board, collected during the worst of the global financial crisis in 2008/09, reveal foreigners picked up $23.4 billion in Australian real estate assets including 3,639 new and existing homes, and 988 parcels of land.
‘We see a lot of interest from Singapore, Hong Kong, Tokyo and the UK. They know the market is depressed and they are making huge capital gains and are reinvesting into the market,’ said byron Rose, president of the Real Estate Buyers Association of Australia.
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Real estate agents are marketing abroad where their money is and global real estate firms are also lining up to take advantage of the trend. For example, CB Richard Ellis last month held a real estate exhibition in Hong Kong promoting a range of residential, commercial and retail opportunities in Australia.
One of the problems is that Australian buyers, both in the residential and commercial markets, are not able to secure lending. CB Richard Ellis said that the top offers at the moment are all coming from abroad.
Also Australia is regarded as a safe investment environment. ‘The foreigners are there because they see Australia as safe, secure and actually having growth, which puts us in a much better position than old Europe and the US,’ said a spokesman.
At the same time residential estate agents have a glut of unsold properties on their books. The most recent auction clearance rates in Sydney and Melbourne were 51.7% and 54.8% respectively, according to Australian Property Monitors, with many vendors withdrawing their properties before they went under the hammer.
Interest rates rises are the problem along with a lack of buyer confidence, according to David Airey, president of the Real Estate Institute of Australia. ‘Listing numbers for agents are backing up. The stockpile is huge and it’s growing. In Perth, for example, there are 17,500 properties on the market and that is around 50% above what would be regarded as normal supply,’ he said.
‘We have been saying for some time that the Reserve Bank’s interest rate rise has bitten way too hard and they have affected buyer confidence in a significant way and they have also affected the buyer’s ability to borrow the money to buy the property,’ he added.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.