Foreign buyers continue to supercharge the Sydney housing market, accounting for more than 21 per cent of demand in NSW and 15 per cent-plus nationally.
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Data released as part of National Australia Bank's quarterly residential property survey shows that while house price growth has slowed somewhat nationally, Sydney continues to outperform, fuelled by foreign investment.
"What we think is that it is mainly Asian [investment] and that it is mainly Chinese," NAB chief economist Alan Oster said.
Foreign buyers' interest is centred on apartments in the $500,000 to $1 million price bracket.
The Sydney figure is the highest to date in the NAB survey.
Mr Oster subscribes to the view that Sydney property is an attractive way for Chinese investors to move cash out of China.
"It's a bolthole, that's everyone's view that we talk to," he said.
The increased investment is beginning to have a measurable impact on the market, according to Allen Wargent Property Buyers principal Pete Wargent.
Mr Wargent nominates four ways in which Asian investment is pumping up, or at least affecting, Australia's real estate markets: developer capital forcing up land values; a doubling of approved purchases; record Chinese tourism spending; and capital flight from China.
"It is no longer in question of "if" capital inflows from Asia are impacting our property markets, the questions should rather be "how exactly are they doing so?" and "to what extent?" Mr Wargent wrote on his markets analysis blog.
"In the development space there have been several instances of Asian developers paying prices comfortably in excess of what is perceived locally to be "fair market value", in certain cases 25 to 40 per cent above what domestic developers might previously have been prepared to pay," he said.
Mr Wargent pointed to Hong Kong's Golden Horse group purchasing a development site in Erskineville, which at $350 million was the highest price paid for such a transaction.
"Increasingly assured of their ability to peddle apartments offshore, developers have proceeded to commence the construction of record volumes of high-rise supply, and pleasingly this trend is helping to add significantly to the aggregate dwelling stock," Mr Wargent said.
Mr Wargent appears to support Mr Oster's view that there is capital flight from Asia into the Australian property market.
"While the value of approved foreign real estate purchases may appear immaterial in the context of a $5.4 trillion housing market, it would be naive to think that Asian capital is not having an impact at the margin, particularly in a market where annual housing finance domestically is measured only in billions," he wrote.
NAB is forecasting average national house price growth of 4.4 per cent through to the end of 2015. Sydney will lead capital growth at an expected 7.7 per cent, followed by 6.2 per cent in Melbourne, 3.8 per cent in Brisbane, 0.7 per cent in Perth and 0.4 per cent in Adelaide.
"Average national house price growth is expected to moderate in 2016 to 3.4 per cent, largely reflecting our forecasts for rising unemployment, sluggish household income growth, affordability concerns (especially in Sydney and Melbourne), cost of living pressures and still high levels of household debt," Mr Oster said.
"Overall sentiment remains strongest in NSW, followed by Victoria and Queensland. Sentiment improved in South Australia and the Northern Territory but was still negative and unchanged in Western Australia."
