Foreign investment is overheating our property market
If you attend an auction in the eastern suburbs of Melbourne, the chances are that the winning bidder will be a foreign buyer. In recent months, Australians have become increasingly frustrated that they are being outbid for residential properties.
Young people wanting to establish a home have found that the expected prices are being pushed higher and higher.
This is having a flow-on effect through the property market as potential buyers shift their attention to other suburbs. The consequence is a further escalation in prices. Most young buyers are being pushed further and further towards the outskirts of the metropolitan area.
The move by foreign buyers into the residential market follows a decision by the Rudd government to relax the Foreign Investment Rules last April. In summary, the caps on investment were changed, as was the type of property that could be purchased, and the reporting requirements. The result has been a flood of overseas buyers.
Some have purchased houses for investment; others to meet the residential requirements of some schools. Some houses are occupied, but others remain empty.
Recently the Governor of the Reserve Bank expressed his concerns about the changes.
All of this compounds the existing housing shortage which is largely driven by the Rudd government’s huge increase in immigration. Sixty per cent of the population increase in Melbourne and Sydney is the result of the highest immigration numbers in Australia’s history.
As a consequence, Australian house prices are now 29 per cent above their long term trend. The ratio of Australian house prices to income is amongst the highest in the world.
There is also a growing, concerning, social divide across the suburbs of our major cities.
The government response to mounting criticism was to deny the foreign investment changes at first, saying that it had simply reduced red tape. This was just spin.
Then it said the purchases were being monitored, yet the reporting requirements had been removed.
Now it has announced an investigation into 50 purchases. This is like checking to see if the crocodiles in the back pool have eaten anybody when they shouldn’t be there in the first place!
If the changes were introduced, as the government suggested at one stage, as a part of the stimulus package, then they are no longer necessary and should be reversed. Australia has not had the housing meltdown that afflicted the US.
Secondly the government should be acting on the population problems now, not in a year’s time.
By the time any changes are implemented, another half a million people will have moved to Australia, either permanently or for an extended stay.
This will compound the problems of congested roads, overcrowded public transport, inadequate water supplies and poor infrastructure.
In the meantime, many Australians are finding it increasingly difficult to afford housing in the middle and inner suburbs. When they do find a home, they will also find their interest rates increasing, adding injury to perceived insult.
Foreign investment should be in the productive capacity of the Australian economy, not in residential housing.
It shouldn’t take an investigation and 12 months of consultations to understand what most Australian think about the matter.
Read all about it
Up to the minute Twitter chatter
The latest and greatest
Good morning Punchers. After four years of excellent fun and great conversation, this is the final post…
I have had some close calls, one that involved what looked to me like an AK47 pointed my way, followed…
In a world in which there are still people who subscribe to the vile notion that certain victims of sexual…