Invest
Did a foreign investor exodus trigger the housing downturn?
Data revealed at a property industry event has pointed to foreign investors leaving the property market as a cause of the current tightening of finance for investment properties.
Did a foreign investor exodus trigger the housing downturn?
Data revealed at a property industry event has pointed to foreign investors leaving the property market as a cause of the current tightening of finance for investment properties.
A lack of confidence and the banks clamping down have been thought of as reasons why acquiring finance is so difficult for property investors lately, but according to the Housing Industry Association’s (HIA) chief economist, Tim Reardon, foreign investors leaving Australia’s property market also has played a considerable role.
Speaking at the HIA’s March Industry Outlook Breakfast in Sydney, Mr Reardon said data from HIA Economics and the RBA have pointed to lending to investors to drop down to its lowest level ever.
The explanation for this, the chief economist said, was not just because of declining confidence in the market or banks restricting access to finance, but because of foreign investors leaving the market.
Over the last two years, Mr Reardon said data from the Foreign Investment Review Board saw foreign investment decline from $30 billion to $12 billion, with the vast majority of that sourced from China.
“What we know is state government certainly acted to restrict foreign investors in the market,” he said.
“Punitive rates of stamp duty have certainly had an impact, differential exchange rates may have had an impact, falling house prices in Sydney and Melbourne may have had an impact.
“But if we look at the rest of the world, Toronto has seen the same thing, London has seen the same thing, in fact, they’ve seen bigger reductions in foreign investor activity in residential homes than we’ve seen.”
Mr Reardon said the reason why most Chinese investors have left the market has to be due to the Chinese restrictions placed on the outflow of investment out of China.
This has had a significant impact in the Sydney market, he claimed, as it caused the market to experience a sharp downturn at the end of 2018, which Mr Reardon labelled as “largely unprecedented” and something that has not occurred in the last decade.
“If those market conditions continue, then the correction we’re expecting in the market, the correction we thought would take two years, will have been achieved in three months,” Mr Reardon concluded.
RELATED ARTICLES
Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more
Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more
Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more
Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more
Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more
Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more
Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
