Canberra was hot property for foreign buyers in the 2022-23 financial year, with new figures showing overseas purchasers spent $218 million on ACT real estate.
It was a significant increase on the year prior, when foreign buyers spent $130 million in the ACT.
The latest data from the Australian Taxation Office shows a significant uptick in foreign real estate investment across the country.
Overseas buyers made 5360 purchase transactions in Australia during 2022-23, totalling $4.9 billion, compared with 4228 purchases the year prior which totalled $3.9 billion.
The increase had come from a low base, however. Foreign investment numbers were on the decline since at least 2017-18 when more than 10,000 foreign purchases were recorded.
CoreLogic research director Tim Lawless said total purchases were still "well below" the number seen six years ago, the most recent figures showed foreign investment was picking up post-COVID.
"The reason I think we're seeing a pick-up is probably a combination of open borders ... but also there's obviously been a huge amount of migration coming into Australia, a huge amount of foreign students bouncing back into Australia as well," Mr Lawless said.
China has consistently been the largest source of residential property investment for Australia.
In the last quarter of 2023, the most recent period the Department of Treasury has data available for, the Foreign Investment Review Board approved 1580 residential real estate investment proposals totalling $1.9 billion.
Chinese buyers made up the vast majority of the total value, with $800 million worth of property purchases, followed by Hong Kong, India, Vietnam and Taiwan.
ACT purchases rise by 80 per cent
While foreign investment numbers have been falling across Australia for some years, investment in Canberra has been steadily increasing.
Foreign buyers purchased 369 properties in the ACT in the 2022-23 financial year, about an 80 per cent increase on the 206 purchases the year prior.
Numbers have been on the rise since 2017-18 when just 41 foreign purchases were recorded in the ACT.
Canberra's rise in popularity could be partly due to a surge in new developments in recent years, Mr Lawless said.
Generally foreigners can only purchase new dwellings, in line with the federal government's policy which aims to ensure foreign investment helps to increase housing supply.
Temporary residents, including international students, are permitted to buy established homes, however they must reside in the property and sell it when they are no longer a resident.
Those who wish to buy an established home also face much higher fees. The application fee to purchase an existing home starts at $42,300 for homes valued up to $1 million after the federal government tripled the charges earlier in 2024.
'The most friendly' city for foreign buyers
Real estate agent Rita Feng, from Whitcombe and Feng Real Estate, said Canberra was "the most friendly" city for foreign buyers thanks to fewer taxes and strong rental returns.
In NSW, foreign buyers are charged a purchaser duty of 8 per cent of the purchase price, in addition to stamp duty.
In the ACT, foreign owners must pay a land tax of 0.75 per cent of the land's average unimproved value every year, on top of the general investor land tax.
Canberra's status as the nation's capital and its proximity to top-tier universities was also appealing to foreigners, Ms Feng said.
She said some overseas buyers looked to buy a home that could be rented to their children while they studied in Canberra.
"It's not a big city but we've got a very beautiful lifestyle and perfect for their children to study here in one of the best universities in Australia," she said.
"It's a very safe environment as well. That's how they understand it."
Inner-city suburbs are generally where foreign buyers look for property in Canberra, for the low rental vacancy rates and high rental returns.
"I would say that within the four or five kilometres from the CBD is generally what the investors will look at," Ms Feng said.
