The number of foreign buyers has reached record levels in Victoria, where they accounted for 32.5 per cent of all new property sales in the fourth quarter of 2014.
While foreign buyers were less prevalent in new housing markets nationally in the fourth quarter, accounting for 14.8 per cent of demand compared with 16.8 per cent in the third, one in three new homes in Victoria was purchased by a foreigner, according to NAB’s residential property survey for the fourth quarter of 2014.
Nationwide, 53 per cent of foreign purchases were apartments, 31 per cent houses and 16 per cent were for re-development.
In Victoria, apartments made up just 44 per cent of all purchases. Foreigners bought more houses in Victoria (38 per cent) than in any other state, the survey found.
The bulk of foreign buyers bought properties between $500,000 and $1 million, with 29 per cent purchasing properties under $500,000.
Approximately 5 per cent of all sales were for premium properties over $5 million.
NAB Economics expects average city house prices to cool to around 4 per cent over the year to end 2015 and 2 per cent over the year to end 2016.
“Our assessment of the market remains that house price growth will continue to moderate because of rising unemployment, sluggish household income growth, affordability concerns, cost of living pressures and high levels of household debt,” the report said.
“We are also forecasting two further interest rate cuts of 25 basis points in March and 25 basis points in August 2015, bringing the official cash rate down to 2 per cent, which should support house prices a little more than previously expected.”