Tighter regulations on foreign buyers of Australian residential property are starting to put the clamps on overseas investment.
The Foreign Investment Review Board’s annual report has found foreign investment in our nation’s housing market has dropped by a whopping two-thirds through 2016.
The FIRB stats show the number of residential approvals from foreigners dropping 67 per cent to 13,198 in 2016-17.
The value of those approvals dropped from $72 million down to $25 million over the period.
The report from the review board pointed to new FIRB application fees as a main driver of the drop in foreign investor activity.
“The reduction in approvals reflects investor reaction to the introduction of FIRB application fees in 2015, which has changed investor behaviour by encouraging applications only for properties they intend to acquire,” the FIRB report said.
“Investors now have an incentive to apply only when they have a high certainty of purchasing.”
China remains the biggest player for Australian residential and commercial property, with around a quarter of all foreign money spent being from there.
Canadian and American buyers are the next two highest investors in Australia.
Carrie Law is the director of Chinese real estate website Juwai and told the ABC things dropped off really quickly at the start of 2017.
“These half years [second half of 2016 and first half of 2017] were like night and day in terms of Chinese investment,” she said.
“In the second half of 2016, Chinese investment were investing in Australian real estate at an almost irrational pace … it was like money falling from heaven for vendors and developers.”
“In early 2017, capital controls, financing restrictions, and foreign buyer taxes reduced Chinese investment to more reasonable levels.”