Foreign investment "absolutely critical" to increased housing supply: Kelly O'Dwyer

Federal Liberal MP Kelly O'Dwyer says there is "no one silver bullet" when it comes to housing affordability.

However, at speech made today to the Committee for Economic Development of Australia (CEDA), O'Dwyer, who stood as the chair of a Federal Parliamentary inquiry into the role of foreign buyers in Australia's property market, noted the role of foreign investors in increasing housing supply.

"One of the most critical things I think that the government can do is make sure that we encourage foreign investment," she said.

O'Dwyer said foreign investment was "absolutely critical" to the supply of new dwelling stock and alleviating price pressure.

"This is something that the house standing committee on economics heard a lot about.

"We received evidence from not only economists and academics but also the Reserve Bank of Australia, who said that if you can increase dwelling stock, this has an impact on price... you can keep costs reasonably contained."

O'Dwyer answered questions to CEDA members following a speech on foreign investment, where she invoked the classic Australian comedy The Castle, referencing Australia's enthusiasm for home ownership. Having earlier commented on the Foreign Investment Review Board's (FIRB) lack of action on breaches of current regulation, which requires most foreign buyers to only purchase new housing stock, O'Dwyer noted the opposite effect that foreign investors can have in the established housing market.

"Now, when it comes to existing dwellings, it's somewhat different," she said.

"When there is restricted supply and increased competition, that will also have an impact on price."

O'Dwyer did, however, maintain that the issue of affordability remains a complex one.

"Now, I don't think it's the government's role to determine the price of people's home. It's the government's role to make sure the policy settings are broadly right, so that we encourage new dwellings to be constructed, so that we make sure that there are options for people... to purchase, to rent, or to build themselves.

"And this is a really complex equation. There is no one silver bullet to housing affordability, but we have to look at all these elements combined in order to make sure the dreams of particularly young Australians, to be able to purchase or own their own home – are still going to be a reality for them as they were for their parent's generation."

While O'Dwyer stressed the number of different factors affecting housing affordability, Prime Minister Tony Abbott also commented earlier this week on his plans to tighten regulation around foreign investment to protect first home buyer's, saying "obviously, the last thing we want to be doing is pricing young home buyers out of the market".