FIRB confirms suspicions: foreigners building the houses Australians won't

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The media is going nuts for the big number everyone's been waiting for: Chinese investors drop $12.4 billion on real estate (residential and non-residential). Sounds big right? 

That is until you look at the total approved developments: $74.59 billion. The way it is broken down is a bit complicated and some of the properties are Foreign Investment Review Board (FIRB) approved for the developer without a country specified. On countries that we do know about ($43.7 billion), Chinese investors make up just 28.4% (Table 2.12). If you haven't worked it out, that means 71.6% of overseas-origin real estate investment comes from other countries. 

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The FIRB haven't broken down residential real estate by country of origin, but out of the $34.72 billion invested into residential real estate, $27.2 billion dollars was invested into building new stock (Table 2.8). That's 78%! In fact, looking from 2012-13 to 2013-14, purchases of existing housing stock only went up by $1.15 billion, while investment in new property went up by $16.4 billion. In essence, foreign investment is doing what Australians either can't or won't do: build the new housing stock we need.

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You can find the full report here.


Showing 1 reaction

  • commented 2015-06-23 08:21:00 +1000
    What about problems with local housing regulation? Why can’t we have policies that protect the property market? Is foreign owned new stock only a game for employment? Infortunately it will also continue to support the housing bubble we’re in. There will never be enough foreign investment to depreciate the market because that’s just bad business and FIs will intentionally avoid that. FI is not the way to go.