Fears that offshore investors are pushing locals out of the property market are unfounded, a property research firm has argued in its submission to the parliamentary inquiry into foreign investment.
The House of Representatives’ Standing Committee on Economics is conducting an inquiry into the legislative framework surrounding foreign buyers of Australian real estate.
In a submission to the committee, Nyko Property director Bill Nikolouzakis said overseas investors tend to buy different products to their Australian counterparts.
“What is often forgotten is that foreign nationals can’t buy existing residential property, but they can typically get approval to buy residential property in new developments so they are not competing with first home owners or anyone else for those existing properties,” Mr Nikolouzakis said.
“This is a market that Nyko Property’s clients in Australia normally are not very supportive of as an investment option and are therefore not competing with foreign investors for those properties,” he said.
He believes these foreign buyers help support employment in the ailing construction sector.
“It’s worth noting that the construction industry makes up 9.1 per cent of the Australian workforce and a change in the rules for foreign investors making it more difficult for them to invest in new Australian property would be detrimental to that industry in a workforce that is already struggling with job losses in manufacturing,” he said.
On the other hand, Hotspotting.com director Terry Ryder recently warned investors against buying in markets like inner-city Melbourne due to heavy activity from Chinese investors.
“Developers are proceeding with new projects, regardless of the high vacancies, because they believe they can sell the apartments off-the-plan to Chinese investors – often at levels well above local prices,” Mr Ryder said.
“In other words, it’s all about two-tiered marketing. Local investors should stay well away from this market.”
However, the scale of the problem may be fairly limited, according to SQM’s Louis Christopher.
In a review of latest figures from the Foreign Investment Review Board, Mr Christopher said Chinese buyers have minimal impact on the market.
“For those who have been freaking out about the Chinese driving up property prices, well, at just $5.9 billion including purchases of off-the-plan developments and commercial property purchases, they only account for a very small fraction of property sales last year,” he said.
“Let’s remember there were over $240 billion dollars of residential property sold nationwide.”