Banning Foreign Investment - Will It Relieve The Pressure On The Housing Market?

Recently, a journalist asked me to comment on the Coalition's intention to lower permanent migrant intake and international student numbers at Australian universities as well as Peter Dutton's proposal to restrict foreign property purchases.

Foreign ownership is frequently cited by critics as a major contributor to the housing market's problems. According to data, foreign entities possess approximately 2% of Australia's housing supply. Foreign ownership makes for a minor portion of Australia's $11 trillion residential property market, which has $2.5 trillion in mortgages (22%).

The debate of limiting foreign investment is intended to address the current real estate market collapse. However, criticizing foreign purchasers ignores root causes such as government policies, housing shortages, rising construction prices, and high loan rates.

Australia faces a serious housing deficit, requiring around 1.8 million new dwellings over the next decade. This shortage mostly raises housing prices, which has an impact on national affordability. Banning foreign investors would not enhance housing supply; rather, it might limit finance for future constructions.

Furthermore, building costs have increased by 30-40% in recent years as a result of supply chain disruptions, labor shortages, and rising material prices. Contrary to popular assumption, foreign investors frequently fund large-scale projects, leveraging economies of scale to help alleviate escalating prices.

Inflation and interest rate increases have exacerbated Australians' mortgage stress, affecting almost 1.5 million people. While some attribute greater competition in property markets to foreign purchasers, it is crucial to highlight that they are already prohibited from owning established properties under current restrictions. They often invest in new buildings or properties with a large cash reserve.

Finally, foreign investment benefits Australia's economy by creating construction jobs and funding infrastructure development. Restricting this investment could exacerbate existing housing shortages and put more financial strain on local developers and buyers.

As a real estate specialist, I believe that tackling these difficulties requires comprehensive answers rather than blaming foreign investors. GiFang.com specializes in connecting Australian real estate agents with Chinese purchasers using focused marketing methods on platforms such as WeChat and Little Red Book.

Our platform provides direct access to a large Chinese audience actively looking for Australian properties, resulting in successful marketing campaigns that increase engagement and sales.

For more information on how GiFang.com may help your real estate business, please visit our website or contact us personally. Thank you for your time, and we hope to assist you further.

Author: Michael Yang, CEO of GiFang.com, can be reached via [email protected]