Despite fears about rising house prices and increased foreign property investment, a number of stakeholders have claimed the idea of Sydney being ‘at capacity’ is simply an excuse and local investors can still thrive in the city.
Speaking at the Property Council of Australia Residential Outlook 2014 this morning, Rodd Fehring, executive general manager, residential at Australand, said the perception that Sydney was full, or being ‘invaded’ was an easy out for governments that don’t want to invest in infrastructure.
“Sydney’s not full. It wasn’t full in the 1990s when the statement was made by Bob Carr. Effectively it was used as an excuse to avoid the investment in infrastructure necessary to drive the productivity growth in this city," he said.
“Sydney is Australia’s international city and the fact that its infrastructure has been allowed to lament for a long period of time, underinvested, is now showing up in terms of poor productivity growth in this particular city.”
Mr Fehring said Sydney needed to effectively address these issues to ensure the city’s property market continues to thrive.
“Of course infrastructure drives demand. Of course it reshapes how cities function and of course it makes them more productive, and as a consequence, they become more attractive from the point of view of employment generation, economic growth et cetera, which then drives property markets,” he said.
Louis Christopher, managing director of SQM Research, said the notion that Sydney was full and local investors were at a disadvantage was misplaced and misinformed.
“We think the rules around foreign investment as they currently stand are fine. We think it’s great that we’re getting foreign investment in new stock – we need that so we can build new stock,” he said.
Mr Christopher said there is a lot of fear in Sydney that foreign investors are driving up existing property prices beyond the reach of locals, but he argued the anecdotes about locals being priced out of the market don’t match the data.
“There’s a lot of hyperbole out there and the media is just grabbing onto this like you wouldn’t believe and they’re basing it on hearsay,” he said.
“We can’t actually get a lot of data on this. The Foreign Investment Review Board will not release a lot of data, but the biggest estimate I’ve seen is that Chinese buyers bought about $5 billion worth of property last year across the country. The total sales turnover in investment was $240 billion – so it’s not big in the scheme of things.
“It’s nowhere near as bad or as dramatic as the media is making out.”