$61bil In Foreign Buying Challenged

Posted on 14/07/2016  
$61bil In Foreign Buying Challenged

The Foreign Investment Review Board (FIRB) approved a whopping $61 billion in foreign investment in Australian dwellings in the 2015 financial year. And leading property investment specialist Performance Property Advisory has questioned whether it’s all in the best interests of Australians.

Melbourne-based Performance Property Advisory, a member of the Hotspotting Panel of Partners, says about 80% of approvals were for Melbourne and Sydney property. And, though the foreign buyers ranged in age from university students to retired couples, all had one thing in common: they desired a slice of property in Australia.

“Sixty-one billion - let that sink in,” says director David McMillan. “That’s the equivalent of 61,000 foreigners coming into our marketplace holding a bag of a million dollars each, ready to snap up local homes and off-the-plan plan real estate.

“While that may seem like a good thing for the economy, the downside is it also means these cash-rich foreign investors are competing with local mums and dads, most of whom don’t have $1 million - and just want to find a home they can afford.”

Roughly $10 billion of the $61 billion was spent on established homes in leafy school belt suburbs, largely as investments.

McMillan says that although Performance Property Advisory helps local high-income investors spot good quality markets that show value, he understands the frustration of everyday locals who “have to complete with people who haven’t grown up here, don’t live here and are not Australian citizens”.

“The rules are that foreigners can buy only new properties and off-the-plan properties because it stimulates growth and leads to jobs – and we support this. But there’s something very wrong when temporary visa holders, many being foreign kids on student visas, are allowed to snap up established properties - valued at anywhere between $500,000 and $20 million - because it takes away from the quality housing stock for Australians.”

McMillan says the $61 billion approved by the FIRB in FY2015 is unprecedented - and more than triple the foreign investments in domestic housing in the three years prior.

McMillan, an investor in property over the last decade, is also a qualified property valuer, qualified property investment adviser and a licensed real estate agent. Performance Property Advisory is a data-driven property investment firm working with investors who are serious about growing a property portfolio with a solid return on investment.

 

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