Foreign investment in residential property in Australia is growing rapidly, despite restrictions. Australia's Foreign Investment Review Board (FIRB) grave permission for 11,668 residential property purchases by foreigners in 2012-13, an increase of 19% on the previous financial year, according to the FIRB.
All non-residents must:
- Obtain permission from the FIRB before buying residential property in Australia.
- Are not allowed to buy an established (previously occupied) house.
- May be allowed to buy an unoccupied new dwelling, if the FIRB feels that the Australia’s housing stock has increased i.e. purchases of houses by foreigners will not cause shortages for the natives.
- Temporarily establishing residence in Australia for the purpose of buying a house is not a viable alternative to obtaining FIRB permission, since temporary residents must sell their property if they leave Australia.
“Foreign investment in the Australian residential real estate sector fetched AU$17 billion (US$15.21 billion) last financial year. Investment in commercial properties was AU$35 billion (US$31.33 billion). Nearly 12,025 purchases by foreigners of commercial real estate were approved, including offices, shopping centres and hotels. Investment in commercial properties was also 19% higher than the previous financial year,” according to the FIRB report.
Asian investors are widely believed to be driving up Australian housing prices, by buying homes for children studying in Australia.
Chinese citizens are now the largest group of foreign investors. Chinese investment in Australia’s residential and commercial properties increased by 42% during the last financial year. Total investment from Chinese buyers was AU$5.9 billion (US$5.3 billion) compared with AU$4.9 billion (US$4.39 billion) and AU$4.4 billion (US$3.94 billion) from Canadian and American investors respectively. American investment in Australian property slumped by 85% during the latest financial year.
A recent survey by HSBC, the UK and Asian-based bank, confirms that Australia is a favourite destination for affluent Asians buying properties overseas.
Out of 7,245 affluent individuals surveyed in seven Asian nations, 18% of Indians, 9% of Chinese, 19% of Singaporeans and 26% of Malaysians had invested in Australian property.
Of affluent Asians looking to buy in Australia in the coming year, 25% are planning to buy in Queensland, 23% in the Australian Capital Territory, 20% in Victoria, 18% in New South Wales and 16% in Western Australia, the survey found.
Instead of investment, several other factors including availability of good education, better health system, comparatively cleaner environment and better living standards are believed to be attracting Affluent Asians.