Overseas buyers ‘increase supply’ and ‘keep prices low’

Overseas buyers ‘increase supply’ and ‘keep prices low’

18 February 2015 by Nick Bendel 1 comments

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”.

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.

[Related: Agents threatened with penalties over foreign buyers]

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
REVEALED: The 10 best agents in Australia for 2017

For the first time ever, the top 10 agents in the REB Top 100 Agents ranking are revealed in this exclusive podcast. ...

View all podcasts

Are dodgy agents being punished enough?

Yes (8.6%)
No (55%)
Only in some states (2.3%)
Not all dodgy agents are being found out (34.1%)

Total votes: 220
The voting for this poll has ended on: April 15, 2017
Do you have an industry update?