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Foreigners Still Buying Despite Restrictions

In recent headlines, The Australian reported that foreigners will buy almost 9 per cent of all homes for sale over the next year.


Even after the Rudd government reinstated foreign investment laws which restrict foreign investors to new-home purchases and only allow temporary residents to buy existing housing for their own use while living in Australia, a new survey has shown that this isn’t curbing offshore buyers.

The law change has been blamed for contributing to a major drop in auction clearance rates, especially in the top-end housing markets of Melbourne and Sydney, but according to a National Australia Bank residential property survey, 250 respondents believed 9 per cent of all house purchases over the next year will be by offshore buyers.

The survey canvassed property professionals, property developers, asset fund managers, owners and investors.


The bank is surprised at the result, which indicated overseas buyers would buy about 47,000 of the 520,000 properties likely to be traded across Australia in the next year.   

The Rudd government had to reintroduce the restrictions to slow an overheated market.

The Real Estate Institute of Australia, which backed the return of restrictions, accused the Foreign Investment Review Board of not effectively policing the relaxed buying rules.

The report also found that respondents predicted a fall in price expectations for the next 12 months across all capital city markets, owner-occupiers would continue to dominate the market, accounting for almost 47 per cent of purchases, and investors would buy more than 29 per cent of stock.

What do you think? Should these restrictions be in place and monitored more closely or is it a good time to have foreign investment boost our economy?