The vast majority of foreign nationals buying investment properties are buying apartments off the plan. These are the properties that are overpriced by usually 20%+ and are very difficult to lease out. They are quite often inner city or on the fringe in Docklands and Southbank. Foreigners hold them for 3-5 years and then they sometimes sell them at a break-even or even a loss. The Victorian state government wants to stop foreign nationals buying in Victoria by increasing the stamp duty they must pay. This new 3% tax may well be the straw that breaks the camel’s back. And for all those high rise developments in the pipeline – GOOD LUCK!!!
Some of the foreign national investors buy land and develop townhouses, villas or homes to live in. These create jobs here in Australia. The foreign nationals spend money to build homes, and furnish them spending money locally in shops. A local buyer can purchase an older home, rent it out for several years until the land appreciates enough to get a further loan to build or redevelop the land. This means, no extra work for builders, no cabinet makers or furniture manufacturers.
For the most part a Foreign National purchaser buys here because their kids are going to school here or they are waiting to get permanent residency and further to that, citizenship. These are the people who will be your future neighbours, your children’s friends at the local school. We need to increase our population as quickly as possible and whilst the Government looks for more ways to waste our money, I think there are better ways to collect it.
Again over the weekend, auction clearance rates were strong, but it was the sheer numbers of people bidding at all the auctions we attended over the weekend that shows the true strength of the market. The REIV published an 80% clearance rate whilst APM published an 82% clearance rate. Again the middle ring of suburbs lead the way with properties selling mainly on or around expectation. One or two dropped a little lower than expected but the vast majority were at or above expectation.
There are still 3 more very full May auction weekends but over the next 3 weeks we will see the June offerings. With the exception of the 2nd weekend, I would expect to see auction volumes in the 700’s to 800’s. If we do, the market may even go into July with some upbeat tempo.
If you are considering buying this year, please feel free to contact our office for some assistance. Moving into the colder months usually greatly increases the off market transactions.
Ian James
Director
JPP Buyer Advocates