Foreign investment critical to residential housing

Foreign investment critical to residential housingA House of Representatives inquiry into foreign investment in residential real estate has heard the Property Council debunk some of the myths associated with foreign investment and housing growth.In its presentation to the House Standing Committee on Economics, the Property Council asserted that foreign investment in housing amounts to only 4.6 per cent of all residential purchases.Far from driving up housing prices, it said that foreign investment actually plays a critical role in leveraging additional housing into the domestic housing market. Foreign investment across all property asset classes helps to create jobs, makes it easier to initiate developments and supports the creation of new housing supply. Every new home that a foreign investor purchases actually enables four other homes to be built.As Australia records 180,000 plus building approval figures, assisted by foreign investment, new job opportunities in Australian manufacturing emerge. From an economic perspective, this housing recovery has delivered almost $1 billion in extra revenue to underwrite the recent NSW State budget alone, which shows the real value of residential development to the national economy.The Property Council said current data does not support the contention that housing is being pushed out of reach of the average Australian. It says there simply isn’t enough foreign investment to skew the residential market as a whole.According to the Property Council, the current regulatory framework is sound, with Australia’s foreign investment rules among the toughest in the world.Foreign Investment Review Board (FIRB) rules require development to take place within 24 months in order to discourage land banking; they help developers initially sell enough dwellings to start new developments to add to supply; and they prohibit foreign persons from buying established homes. Furthermore, they require foreign investors to replace every demolished house with two new houses.The parliamentary inquiry heard that the main factors affecting housing affordability in Australia are: constricted land supply; bad planning systems; and crippling taxes and charges.What is needed are fair, stable and practical FIRB rules that are well monitored and enforced to maintain investor confidence.In essence, said the Property Council, the FIRB should be provided with resources to collect data and enforce the existing rules; Australians should be given ready access to information to understand the true impacts of foreign investment on the housing market; and we should utilise the information from hearings to stamp out media untruths regarding foreign investors driving up property prices.