Jonathon Kearns, the head of Financial Stability at the Reserve Bank of Australia (RBA), has said foreign demand for residential property in Australia has decreased over the past 12 months.
Foreign ownership of Australian property, especially within the Chinese market, has been a hot topic over the past year, with authorities imposing regulations to quell demand.
So what has changed and why does this matter to us? We blogged the facts.
A top central bank official in China was reported as saying that capital controls in Beijing have been tightened, which has limited the accessibility of local finance to Chinese property investors.
According to Kearns, China accounts for approximately 75% of Australia’s foreign property buyers, so it’s understandable that we have felt the impact on the back of tighter regulations in Beijing.
These figures were quoted in a speech Kearns made to the Australia-China conference on property earlier this week.
"Purchases of new properties by foreign buyers have eased over the past year, reportedly because of stricter enforcement of Chinese capital controls and tighter access to finance for foreign buyers," he said.
The RBA explained that Australia allows buyers in foreign countries to purchase existing dwellings if they are temporary Australian residents.
Non-residents can only purchase newly built dwellings in Australia.
Overseas demand in the Australian property market is said to impact the affordability of housing for people who reside here. This is why the issue has been such a hot topic.
Regulators have also warned Australians of increasing household debt, which means more pressure on Australian back pockets.
Kearns also said that foreign ownership does not lower the total supply of properties available to residents in Australia, and may help to expand housing supply.
"Foreign buyers in Australia for work or study would have been renting if they did not purchase. Others rent the property as an investment and so contribute to the rental stock," he said during the conference.
He added that even though some foreign developers have been drawn to Australia, they only make up a small section of the property market.
Kearns also said the RBA is monitoring loans to developers in the residential market to ensure there is not a surge in apartment complexes, which could result in falling prices due to increased supply.
All in all, a decrease in foreign ownership in Australia is positive for the domestic market, since greater wealth stays within the country.
If the RBA is correct, the decrease in foreign ownership should impact affordability positively too, although this is yet to be seen in the market place.
We’ll keep you posted as new data arises. But ultimately, if you feel you are in a position to buy a property, now is certainly a good time.
Before you examine the market, we recommend speaking with a mortgage broker to see what you can afford to spend on a property.
Our brokers will assess your needs, and then research and tailor a loan that matches your unique goals.
That way, when you’re searching for a home or investment property, you can easily determine what is and is not within your budget.
This effectively streamlines the purchase process and helps to ensure you don’t make emotional decisions when buying.
Buying a home above your budget will cause unneeded stress, so we always recommend securing pre-approval first.
Contact us to get started.
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