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Off-the-plan apartments are an increasingly popular option for foreign investors under FIRB restrictions.
Almost a quarter of all off-the-plan unit sales in Sydney were made to foreign investors in the last quarter of 2015.
The latest Urbis Sydney Apartment Essentials report found foreign investors scooped up 24 per cent of new apartments. Non-residents, with the exception of temporary visa holders, are generally restricted to buying new property by the Foreign Investment Review Board (FIRB).
Local owner occupiers dominated 38 per cent of sales, while local investors accounted for 37 per cent.
There were 280 proposed residential projects in Sydney during the December quarter, pushing a total of 34,457 apartments on to market, according to the report.
Overall, 833 off-the-plan apartments were sold, with a weighted average sale price of $1,023,273, seeing an increase of $42,137 from the previous quarter.
The Parramatta region recorded the highest growth in weighted average sale price of off-the-plan apartments; $67,478 more than the previous quarter, while the lower north shore saw the greatest drop in off-the-plan property prices, plunging $691,667.
Although statistics on the foreign investors’ country of origin were not available, Urbis’ associate director of economics and market research Alex Stuart pointed to China for the primary source of investment.
“Anecdotally, Chinese buyers take up a majority of those [foreign] investors,” he said.
Mr Stuart noted that while Sydney has traditionally been strong, neighbouring cities are getting a larger share of foreign buyers. Forty per cent of Melbourne’s inner-city off-the-plan apartments sold to offshore investors in the December quarter, while the proportion was about a third in Brisbane.
“Other markets are picking up and that’s because of affordability,” he said.
Citing Westpac’s announcement last week that it would stop lending to foreign residential property buyers — the third big four bank to do so in recent weeks — he said there was potential for foreign demand to drop if other lenders followed suit.
“[But] there’s still a strong desire from Asia to buy in the market.”
Mark Mendel, chief executive of iBuyNew, a Sydney-based online new property agency, said there was an increase in developers reaching out to them to access local buyers.
“Foreign sales have slowed in 2016,” he said.
“Developers are concerned that lending restrictions from banks are going to prevent many foreign buyers from getting into the market.”
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