By Vern Gowdie – The Daily Reckoning (Australia) –
The impact of foreign investors wading into Australia’s property market has gained a lot of traction in the press — and among politicians too. Resulting in a tightening up of foreign investment regulations and the token foreigner being ‘hung, drawn and quartered’ to show we (as in, the political class) are acting on your concerns (the ones that might get us thrown out of office).
Politicians all play to the crowd. Especially in these times of populist politics.
This is straight from the playbook of ‘never let the truth get in the way of a good story’.
What’s the truth? Well, the most definitive research I’ve found on the impact of foreign investment on property prices comes from none other than the federal government’s Treasury Department.
In December 2016, the Treasury published a working paper (with the not-so-creative title of) ‘Foreign Investment and Residential Property Price Growth’.
Today’s article includes a liberal selection of extracts from the report to determine what the Treasury has identified as the ‘meat and vegies’ and what it has identified as the ‘spices and gravy’ of the Aussie property market ‘meal’.
If foreign investment had the major influence that popular opinion suggests it does, Melbourne property prices would be as high as, or even higher than, those in Sydney. But they’re not.
FIRB data indicates foreign investment accounts for around 10–15% of sales in new properties and 6–8% among existing properties.
When you consider the property pool we have in Australia, the number of existing dwellings far exceeds the supply of new properties being released on the market.