A quarterly survey conducted by the NAB suggested that even thought the Foreign Investment laws were reinstated last April, they are failing to dampen foreign interest in property.
The quarterly residential property survey of 250 real estate agents, developers, owners and fund managers revealed they believed 9% of all house purchases over the next 12 months would be made by offshore buyers – or 47,000 of the 520,000 properties up for sale.
Restrictions on foreign investment were lifted during the credit crunch as part of the economic stimulus measures, but were reinstated in April to prevent overheating in the market.
The Real Estate Institute of Australia has investigated whether the Foreign Investment Review Board has been strictly adhering to the guidelines.
Meanwhile, the survey revealed respondents expected price growth to slow dramatically over the next year, with Melbourne worst affected, according to a new survey.
Respondents expected growth to slow to 1.4% in the next 12 months – down from the 5.4% expected in March. Melbourne prices are expected to grow by just 0.7%, with Sydney growth estimated at 2%.
“While residential house prices are still generally tipped to increase over the next 12 months, we have seen a significant cooling off since the last quarterly survey,” said NAB chief economist Alan Oster. “There has been a very big change in expectations.”
The reasons quoted for the slowing growth are mixed: while developers blamed access to credit affecting the construction of new homes, buyers looked to rising interest rates and sinking housing affordability instead.
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