Melbourne’s weekend auction hits a year-high 80 per cent as local buyers are given new opportunities to enter the property market following the retreat of foreign buyers due to increased stamp duty costs and tighter purchase approval processes.
According to the second quarter Residential Property Survey by the National Australia Bank, foreign purchase of new property fell for the third straight quarter to their lowest level in two years.
“These changes have put the brakes on the volume and the speed of buying by international buyers,” said Jellis Craig director Richard Earle. He added that Chinese nationals, who comprise the largest percentage of foreign buyers in Australia, had pulled back from bidding for unrenovated and compromised B- and C-grade properties above $2 million–an advantage for local buyers.
There were also reported hasty resales on behalf of foreigners. For instance, Fletchers’ Rob Fletcher said that his company was recently instructed to on-sell two expensive properties bought just months earlier by Chinese clients. The buyers were unable to shift the funds needed out of China in time to pay for their purchases.
Though the slowdown in foreign buying has a good effect on local buyers, it also has a negative impact on expensive suburbs. James Buyer Advocates’ Mal James said that declines in activity by Chinese buyers had altered the ultra-top-end, with $7 million-plus properties not faring as well as they did compared to last year. However, local demand for these properties has picked up since May.
“That is definitely driving the market and giving it direction,” James said.