By REIQ chairman Rob Honeycombe
If we had a Yuan for every time we’ve been asked this lately: “Do you have buyers flying in from China who might want this property?”
The government’s started a public discussion on the topic with their Inquiry into “Australia’s Foreign Investment Policy As It Applies To Residential Real Estate.” And market chatter offers great promise of uneducated foreign buyers touching down at Eagle Farm with a suitcase brimming with cash. Those of you selling a property see an opportunity to achieve a premium, while those wanting to buy fear a cashed-up competitor may drive up prices.
So here’s one view on what’s really happening with foreign buyers in the majority of Queensland’s real estate market: Very little. And the reason is a simple one. Most of them cannot buy established or second-hand residential real estate in Australia.
Under rules administered by the Foreign Investment Review Board non-Aussies may only purchase brand new property unless they have one of a limited category of visas, or permanent residency. “It is the Government’s policy that foreign investment in Residential Real Estate should increase Australia’s housing stock. That is, the policy seeks to channel foreign investment in the housing sector into activity that directly increases the supply of new housing (such as new developments of house and land, home units and townhouses) and brings benefits to the local building industry and its suppliers.“
Queensland is attractive to foreign buyers and the 2012-2013 stats show for proposed investment in residential real estate, by value, we had 11% of all approvals. The three largest source countries by value are China, Canada and USA accounting for 11.4%, 9.5% and 8.5% respectively of all approvals.
Clearly property developers are making sales into foreign markets. That’s not a new distribution channel for off-plan property sales and tenants may want to thank them for helping add new stock. According to the Real Estate Institute of Australia, “The number of investment properties held by non-residents, whilst increasing marginally over the six years to 2011-12, has been around an average of 72,000 properties.” “These statistics provide a guide to the extent that foreign investors are providing an increase in the number of rental properties.”
REIA argues that “the level of foreign investment as a proportion of the value of dwelling stock… is still at a level where the ability of foreign investors to influence the market is negligible – in QLD it was 0.24 per cent.”
Many parts of our state are very multi-cultural property marketplaces and we have a lot of clients and customers born and raised in China, Canada and the USA – along with hundreds of other nations, but now making their home here.
We’ll leave it others to debate the pros and cons of foreign investment and whether the current laws should change. What we do know is for many of these cultures there’s an ingrained love of bricks and mortar. Like the Italian and Greek immigrants of past generations as an example, who made a solid mark on Queensland property demand, another generation of new Aussies is showing longer-term locals the benefits of real estate investment.
Naturally as real estate agents we love them for that!