Ninety-four percent of survey respondents to the latest CoreLogic and TEG Rewards Housing Market Sentiment Survey believe that foreign buying activity is placing some degree of upwards pressure on Australian home values. Almost one in five (17%) believe foreign buying is placing ‘extreme’ upwards pressure on home values.
Those most likely to report ‘extreme upwards pressure’ on house prices from foreign investors were from Sydney and Melbourne -- where approvals through the Foreign Investment Review Board (FIRB) were the highest.
One quarter of Sydney respondents thought foreign buyers were placing extreme upwards pressure on dwelling values, and 22% of Melbourne respondents thought this was the case.
However, these are also the two capital cities where capital growth has been the most substantial and housing affordability has been stretched the most.
According to house price data from CoreLogic, home values in Sydney have been rising for four years, and have increased by a cumulative 59% over this growth cycle. Melbourne prices have moved 41% higher over the growth cycle to date.
As a result, home ownership rates have been tumbling. The HILDA report, the most comprehensive long-term study of Australians, released last week, shows that entry-level properties are more expensive than ever and home ownership is dropping.
The report revealed that the number of owner occupied households dropped to 64.9% in 2014, from 68.8% in 2001. Home ownership among Gen Y – those aged between 25 and 34 – declined from 38.7% in 2002 to 29.2% in 2014.
In addition, the 10th percentile of homes – or the cheapest in the market – had grown 108% in value between 2001 and 2014, compared to a 47% growth for 90th percentile properties at the top of the market.