What the FIRB data really means

Debate around offshore investment in housing rose in May after data from the Foreign Investment Review Board (FIRB) showed an apparent collapse in investment.  Despite this, ANZ Research believes foreign buyers still have a sizeable presence in the Australian property sector. Here’s why. 

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According to the FIRB, the number of approvals granted for foreign purchasers to buy residential property in Australia fell by 67 per cent in 2016-17. But this has largely been driven by the introduction of application fees.

"“Foreign buyers still have a sizeable presence in the Australian property sector.”

Other data suggest a much smaller decline in foreign buying than the FIRB data. The ANZ-Property Council Survey shows a sustained but gradual fall in the presence of foreign buyers since the peak about two years ago.


Nationwide, just 11,000 approvals were granted by FIRB in 2016-17, down from 40,000 the previous year. The scale of decline was similar across each of the states, with approvals in New South Wales, Victoria and Queensland all falling 65 per cent to 70 per cent year on year.

Victoria is still the most attractive market for foreign buyers on the basis of the FIRB data, recording 40 per cent of all approvals, followed by New South Wales (30 per cent) and Queensland (20 per cent).

The FIRB believes “the most significant factor explaining this drop is the introduction of application fees in December 2015”. The fees mean from the end of 2015 onwards, it has been in the interest of potential foreign buyers to only apply for approval when they are likely to purchase.

Still, these data do not tell us how many approvals are converted into purchases of property. The headline FIRB data therefore do not tell us much about the actual activity of foreign buyers.


In order to assess movements in foreign-buyer activity, we refer to the quarterly ANZ-PCA survey.

Respondents report the share of property sales to foreign buyers has steadily declined from its peak around two years ago.

The June 2018 survey suggests nationwide 16 per cent of property sales were to foreign buyers, down from 24 per cent in September 2016.

New South Wales (16 per cent down from 25 per cent) and Victoria (21 per cent down from 31 per cent) report similar declines over the same period. 

That the presence of foreign buyers is declining is not surprising. The past couple of years have seen significant policy changes, including:

  • tighter Chinese capital controls, such as limiting the outflow of foreign currency per person per year;
  • the introduction and subsequent raising of stamp duty surcharges on foreign purchasers across New South Wales, Victoria, Queensland and Western Australia;
  • vacancy tax on foreign-owned properties that are unavailable for rental for at least six months a year; and
  • a 50 per cent cap on foreign ownership in new developments.

These structural changes are likely to prevent foreign buyer activity rebounding to its previous peak.

Despite the fall in activity, foreign buyers continue to have an important presence in Australia, attracted by our solid economy and strong population growth.

When assessing these movements, ANZ Research places greater weight on the results of the ANZ-PCA Survey than the raw FIRB data.

Daniel Gradwell is a Senior Economist at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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