Foreign buyer activity weakened in the June quarter 2016, according to the NAB Residential Property Survey.

Foreign buyers accounted for 10.4% of new property purchases in the June quarter, the third consecutive monthly fall. Foreign buyer acquisitions of established property remained at a two-year low of 7.2%, according to the report.

Foreign buyer activity in Queensland fell sharply, but was offset by strong gains in Victoria, and a modest rise in NSW. 

In Victoria, foreign buyers accounted for 21.7% of buyer activity, compared with 10.7% the previous quarter. The sharp increase comes ahead of the increase in the stamp duty surcharge of foreign buyers in Victoria from 3% to 7% for residential property purchased from 1 July 2016.

In Queensland, foreign buyers accounted for 11.2% of new property purchases, down from 21.9% in the first quarter. Queensland has recently introduced a 3% transfer surcharge on foreign buyers, effective later this year.

Foreign purchases of existing property were reasonably steady. "In established property markets, foreign buyers accounted for 9.6% of total demand in Victoria (7.1% in Q1). Foreign buyers were also more active in Queensland, with their market share rising to 7% (6.7% in Q1). In contrast, foreign buyers were slightly less conspicuous in NSW (7.5% vs 7.8%) and in Western Australia (5.8% vs 8.8%)," says the report.

Just over half the Australian properties bought by foreigners (53%) were apartments, while 29% were houses, and 18% were acquired for re-development.

Of the apartment acquired by foreign buyers, 35% were valued below $500,000, and 39.4% were valued between $500,000 and $1 million. 

The NAB report says new government charges and taxes are likely to continue weighing on foreign buyer demand.

The report says, “Indications from the NAB Residential Property survey suggest that foreign demand has continued to shrink, although foreign buyers have refocussed their attention away from Queensland back towards Victoria. Recent (and upcoming) hikes to stamp duties and land taxes for foreign buyers in some states may also weigh on foreign demand."

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