Great Australian Dream? I don’t think so!
The additional demand from abroad is contributing to rising property prices – with average median prices surging more than 10 per cent in capital cities last year – and fuelling the disappointment of would-be local buyers who are being out-bid.
”We have lost three properties (that we know of) to overseas investors who pushed the prices well above the limits of the Australian residents in the room,” said Nikki Symonds, from Sydney’s Lane Cove. ”Three overseas online bidders pushed the price up from $880,000 to $950,000.”
”Our search continues, but we are forced to look further and further outside of Sydney to have even the faintest hope of securing a house,” she said. ”Great Australian Dream? I don’t think so.”
The government’s decision to open the door for more foreign investment in local real estate ssems ”importing a bubble” from China.
The federal government relaxed its foreign investment rules for residential property early last year. While the controlling body, the Foreign Investment Review Board, does not disclose the exact number of sales to overseas investors, anecdotal reports from would-be local buyers and real estate agents across the country point to a surge in spending from Asia – particularly mainland China. Agents are also setting up offices in China and arranging ”property tourism” to tap the demand. However, the lack of statistics measuring the pace of their investment makes it difficult to determine the final impact.
I believe the main drive behind the property price is the rapid gorwth in demand, against a structural shortage of supply.
There’s extraordinary and ongoing rapid growth in the number of actual people in Australia with money wanting to own houses – while the underlying long-term trend in homebuilding remains flat.
Charter Keck Cramer senior economist George Bougias said Asian countries are playing a bigger role in the local property market and people are increasingly looking at Australia as an attractive investment destination.
“As economic relations between Australia and China deepen, we can expect more interest from Chinese nationals in the Australian property market,” he said.
For me, it seems he is saying the great Australia dream is becoming a great daydream!