Overseas buyers ‘increase supply’ and ‘keep prices low’
Tony Abbott’s plan to tighten the rules around foreign investment in residential real estate has been slammed by a group representing Chinese buyers.
The prime minister said he would announce foreign investment reforms “in coming weeks” that would help prevent young buyers being “priced out of the market”.
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Andrew Taylor, co-chief executive of listings portal Juwai, said Mr Abbott’s words contradict the findings of last year’s inquiry into foreign investment in real estate.
“The parliamentary inquiry into foreign investment was conclusive about only one thing, and that is that foreign buyers help first-time buyers by increasing the supply in the market and thus keeping prices low,” he said.
Mr Taylor said foreign buyers are significantly more likely than local buyers to purchase off-the-plan apartments.
“That means they can give developers enough pre-sales to start construction on a project that otherwise would never get built,” he said.
“Banks just won't give them the money to build a project without those pre-sales.”
Mr Taylor also said a crackdown on foreign buyers would damage the Australian economy.
“A JP Morgan report this week says the Australian economy is 'sliding down the precipice' because of the government's poor management,” he said.
“Now the prime minister wants to turn off one of the only sources of capital and investment that's left: the foreign investor.”
According to Mr Taylor, foreign buyers generated tens of millions of dollars in commissions for real estate agents in the past year.