Why a negative focus on foreign investors is wrong

By |
Worried about the “threat” of foreign residential investment and its impact on the market? Property industry professionals reckon you shouldn’t be.

In fact, ongoing negative coverage of foreign residential investment is a beat up and needs to be counteracted with a reality check, according to the REIA.

In her recent submission to the Inquiry into Foreign Investment in Residential Real Estate, REIA CEO Amanda Lynch said the organisation believes that foreign investment is beneficial and adds to the supply of housing.

The focus on Chinese investment in particular was a beat up, she said. In reality, Chinese investment in all real estate amounted to just 11.4% of the total, followed by the US at 9.5% and Canada at 8.5%.

Lynch emphasised that there was insufficient evidence to come to a definitive conclusion on the level of competition between foreign buyers and first home buyers in particular markets.

“On the aggregate data available we see that the mean price that foreign investors pay is at a level higher than the average first home buyers would pay.”

Further, FHBs have a marked preference for buying established real estate while foreign investors tend to purchase new apartments and can only buy established houses if they are temporary residents.

Foreign investors buy at a much higher level of the market than aspiring HBs, Lynch said.

“There is a $1 million average for established real estate for temporary residents and $647,000 for new dwellings, which compares with the current median price of $606,517 for houses and $483,320 for units.”

Foreign investment also adds to the supply of rental property, which was crucial given the national undersupply of housing, Lynch continued.

“Vacancy rates and rents would be higher without foreign investment. Without foreign investment, many building projects would simply not be viable.”

The REIA’s views, which are supported by other industry professionals as YIP has reported in the past, run counter to recent scaremongering on the issue.

Can you afford to buy in this suburb? Find out how much you can borrow

Top Suburbs : ferntree gully , eagle vale , st kilda west , lalor park , cardiff south

go back

Get help financing your investment

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here