The surprising places foreigners are buying real estate in Australia as Sydney’s million dollar-plus house prices become too expensive
Sydney is now so expensive that foreigners are looking to other states to buy property, leading to increased competition for property in other parts of Australia.
New Australian Taxation Office data released on Friday shows New South Wales was the only state where foreigners bought less property in 2022-2023.
This came as every other state and territory saw double-digit increases in the combined number of new homes, existing homes and vacant land sold.
Foreigners spent an average of $914,000 on an Australian property in the last financial year, with foreign transactions across Australia up 27 per cent.
Sydney’s average house price of $1.4 million is by far the most expensive of the Australian capital’s markets, with one property insider revealing foreigners are looking to other major cities as a result.
Sydney is now so expensive that foreigners are looking to other states to buy property – leading to more competition for property in other parts of Australia
New data from the Australian Taxation Office released on Friday showed New South Wales was the only state where foreigners bought less property in 2022-2023 (pictured shows potential buyers in Sydney)
Foreigners, and not just Australians, now see it as increasingly unaffordable, with NSW seeing a 1 per cent drop to 656 overseas transactions in 2022-23, tax authorities data shows.
Peter Li, the managing director of the Plus Agency, which handles $200 million in Australian property sales to overseas Asian buyers every year, said high prices in Sydney meant foreigners were looking elsewhere in Australia.
“High prices in Sydney are driving some buyers to other states,” he told Daily Mail Australia.
‘Remember that in addition to the high prices, they also have to pay significant stamp duty and land tax.’
By comparison, Victoria is proving particularly popular with 2,240 transactions – an increase of 32 per cent – with most activity concentrated in Melbourne, where the average house price is $937,289.
Queensland saw a 17 per cent increase, with foreigners buying property mainly on the Gold Coast and Brisbane, where it has become Australia’s second most expensive state capital market with an average value of $937,479.
Daniel Ho, co-founder and managing director of Juwai IQI, said while Queensland had more foreign buyers, NSW and Victoria attracted more foreign millionaires.
“They appreciate Australia’s strong economy, good education system and attractive lifestyle,” he said.
However, Western Australia saw the biggest increase among states: 46 percent – to 322 foreign transactions.
Perth’s average house price rose 22.2 per cent in the year to $769,691, CoreLogic data showed.
South Australia saw a 40 per cent increase, amounting to 459 overseas transactions, in a state where Adelaide’s average house price is $811,059.
Tasmania saw a 25 per cent increase, leading to 138 overseas transactions with Hobart’s average house price at $697,770.
Peter Li, the managing director of the Plus Agency which handles $200 million a year in Australian property sales to overseas Asian buyers, said high prices in Sydney meant foreigners were looking elsewhere in Australia
The Australian Capital Territory saw a 79 per cent increase to 369 overseas transactions, with Canberra’s average house price at $961,403.
Property buyers who are not permanent residents of Australia must obtain approval from the Foreign Investment Review Board to purchase a home, regardless of whether it is new or established.
Exemptions are only granted to foreigners to purchase an existing property if they can prove that they will occupy it as their main residence or redevelop the property.
Mr Li said foreigners are increasingly buying land to avoid paying stamp duty on an established home.
“House and land packages are a way for foreign buyers to save on stamp duty,” he said.
‘You only pay stamp duty on the land, and not on the construction price of the house.
‘So for a $1 million house you might save 50 per cent of your stamp duty compared to a house that’s already built.
‘That is especially important for foreign buyers who also pay extra stamp duty, on top of the same stamp duty that everyone else pays.’