Many are pointing their fingers at foreign buyers for the increased property prices in Australia. But how does Foreign Investments in Australia really affect the Home Loans in Melbourne and especially contribute to the “Boom” in Housing prices?
Firstly, we must understand that, unlike other countries which have open doors for Foreign Investment, Australia has a regulated approach to foreign investment. This means that foreigners or visa holders from other countries need to apply to the Foreign Investment Review Board (FIRB) for permission to purchase properties in Australia.
But can we really blame foreign investment for the increase of the housing prices in Australia? According to a Research conducted by University of Sydney Professor, Hans Hendrischke, there are doubts regarding the claims that foreign investment is the one causing the proliferation of housing prices. On his research, he indicated that Chinese purchases totaled about 2% of all transactions in 2014. This totality is considered very low to have caused and driven the affordability crisis for Home Loans Melbourne.
How does Foreign Investment help with the crisis? According to the Australian Policy to Foreign Investment, the main objective of this is to increase the supply of new housing, which it is able to accomplish. The wave of property development has shored up the construction industry which was a great help to our economy. Without the support of Foreign Investment, it would not have been possible to build new projects since they were not financially viable for local developers. Foreign Investment has added to the supply of new housing and increased in the supply of rental properties in Home Loans Melbourne.
However, there’s still a long term negative aspect with the current level of Foreign Investments, based on Michael Yardney of Yahoo7 Finance. Lending Specialists is going to share this to our community.
Here are the negative effects of Foreign Investment to Home Loans in Melbourne:
1. Oversupply of apartments particularly in Melbourne and Brisbane. This is a current situation that we experience yet foreign investors still keep on building more houses to supply the demand of their overseas clients.
2. Poor Standard apartments. Due to the increase of the quantity, the rooms are getting smaller and smaller because of lack of space which creates poor quality rooms.
3. Most buildings are owned by investors, instead of the occupants. This creates competition for the tenants.
4. For the years to come, there may be a restraint of the capital and rental growth due to oversupply of properties.
We all should be aware about the financial issues of our community.
If you have any questions or would like to discuss further, please do not hesitate to contact Lending Specialist Melbourne on (03)8805-1800 or email email@example.com