A lot has been written about the cause of Australia’s high property prices.
And overseas capital has been one of the “bogey men” with Chinese buyers, who are the largest source of foreign buyers, causing anti-foreign buyer sentiment fuelled by strong house price growth, particularly in the Sydney and Melbourne property markets.
However new research has cast doubt on claims that foreign investment is pushing up Australian house prices, indicating offshore Chinese purchases totalled just 2 per cent of all transactions in 2014.
University of Sydney Professor Hans Hendrischke was quoted in Domain as saying:
“It’s so low that it would be hard to argue that this is driving the affordability crisis in Australian real estate,”
Dr Hendrischke compared the value of all residential property sales against Foreign Investment Review Board (FIRB) statistics, to calculate the impact of Chinese buyers on local housing markets.
Using data from the Australian Bureau of Statistics and CoreLogic RP Data, he estimated that $270 billion of residential real estate sold nationally in 2014.
Compared to FIRB approvals, which covers both new and established housing, he estimated Chinese purchases totalled “around the 2 per cent mark”, concluding:
“Don’t blame the Chinese,”
Dr Hendrischke argued that FRIB statistics could be “overstated” as the figures were approvals and not actual purchases.
However his research did not take into account the potential impact of illegal purchases by foreigners, which the Federal Government is presently investigating.