In Australia Foreign Sales Might be Driving Up House Prices

Foreign investment is being blamed as the main driver of soaring property prices in Australia’s capital cities.

A survey of property analysts at Australia’s biggest banks and property development companies has cited investors as the most significant driver of demand and prices in the Sydney, Melbourne, Brisbane and Perth housing markets.

Foreign investors were named the main driver in each city, but particularly in Sydney, where 96% of analysts said foreign investment was a significant to very significant driver of increased demand and prices.

Negative gearing and self-managed superannuation funds were also to blame, according to the Australian Property Institute’s (API) biannual property directions survey.

 
The Reserve Bank of Australia has recently expressed concern about the flood of investors in the property market and is looking at new regulations to curb investor activity.

The central bank says loans to property investors are growing at their fastest rate in seven years, pricing some first-home buyers out of the market and creating an imbalance where new lending to investors is out of proportion to rental demand.

House prices have risen more than 10% in the past year, according to property research business RP Data, while Sydney prices have jumped almost 24% in two years.

A parliamentary inquiry is underway into what role foreign investment is playing in driving prices, and whether it is locking first-time buyers out of the market.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza