Australians' deep-seated fear of foreign investment in housing remains: Sydney University research
A new study has revealed Sydneysiders are harbouring deep-seated fears that the Australian property market is being driven by ‘super-rich’ Chinese investors.
Almost 900 Sydneysiders were asked about their perception of foreign investors in the real estate market in a study led by Dr Dallas Rogers, housing researcher for the University of Sydney’s School of Architecture, Design and Planning.
The results found that there remains a high level of public concern and discontent about foreign investment, with more than half of respondents believing that government regulation of foreign investment is ineffective.
There was a view that Chinese investors are ‘super-rich,’ as perceived by 58 percent of respondents.
Around 63 percent identified Chinese as the majority of Sydney investors, which is likely given Chinese investment is concentrated in Sydney and Melbourne but within particular suburbs.
“The recent federal budget saw the government come down hard on foreign investors, which demonstrates the dilemma that the government is facing as it attempts to manage foreign investment alongside a disenchanted Australian public,” Dr Rogers said.
“Historically there has always been cultural tension over land and home ownership in this country that began with the arrival of British settlers in the late 1700s, the Chinese gold rush in the 1850s, and the White Australia policy in the early 1900s.
“In the 2000s, we again face significant societal change due to economic, political and social forces from Asia which, given its proximity to Australia, is reshaping our cities. This is the first time we have sought the individual opinion of Australians on the ground about the impact they believe foreign investment is having in their communities.”
More than 64 percent of respondents cited foreign investors as the main reason for driving up house prices, despite little data on the inflationary impact of foreign investment on property.
This is in spite of National Australia Bank data in 2016 showing that Australian residents and investors still make up a greater proportion of real estate buyers in Australia, accounting for 52 percent of sales, while only 14 percent were foreign investors.
The other most cited triggers for driving prices were low interest rates (37 percent of respondents), planning (36 percent) and local residents/domestic investors (32 percent).
The real estate industry recognises that the sale of established properties plays a big role in shaping housing prices, but there are strict conditions placed on foreign investors.
Foreign investors can buy new properties, but can only purchase established homes if they meet certain criteria, such as a property that will be used for foreign student accommodation.
Domestic residents and investors therefore still make up almost 60 percent of this market, compared to 8.6 percent who are foreign investors.
The study has followed a 2014 Australian Government Parliamentary Inquiry into individual foreign investment in residential real estate due to mounting public pressure.
“The skills and cultural contribution of migrants to Australian society are so often overlooked by an ingrained historical desire to achieve the great Australian dream of homeownership,” Dr Rogers concluded.
A full report has been published in the Journal of the Australian Geographer.