Asian investors are not to blame for rising property prices in Australia, says the head of ANZ’s Australian operations.
Property prices have leapt by more than 10 per cent in the past year, with cashed-up Asian investors and superannuation funds being blamed for fuelling the rises.
However ANZ Australia chief executive Philip Chronican says in his view, most of the problems in the local property market were on the supply side, not the demand side.
“I think the reality is that other than in very small pockets of the country, none of these forces is large enough to drive the market as a whole,” he told a business lunch on Wednesday.
Mr Chronican said demand from China for Australian real estate was partly a result of Chinese parents seeking housing for their children while they were studying in Australia.
He said he was aware of the local sensitivity around foreign investment in the Australian property market.
But in an open economy such as Australia’s, one could not cherry-pick what sort of investment one wanted to have.
Mr Chronican said that over time, Australian businesses would benefit from an increase in foreign direct investment, especially from China as the financial system in Asia opened up.
ANZ estimated that the stock of Chinese direct investment in Australia could be worth up to $200 billion by 2030.
While the Chinese had been mostly interested in investing in the mining and property sectors in Australia, they would start to turn their attention towards investment in the manufacturing, finance and services sectors.
Mr Chronican also said Australian businesses needed to deepen their engagement with Asia.
He said the main thing holding back Australian enterprises from exploring opportunities in Asia was “fear of the unknown”.