Australian real estate needs foreign investors but regulators may be giving them an unintended advantage over local investors, says Aussie Home Loans founder John Symond.
Changes to property investment rules may put Australian investors at a disadvantage to cashed-up foreign buyers, Mr Symond told a parliamentary inquiry into home ownership.
The Australian Prudential Regulation Authority announced the changes last year in a bid to contain overheated property speculation.
“It’s very easy to play at the edges and talk about APRA tightening up lending restrictions for investors, but what about the 20 to 25 per cent, in some areas 30 per cent, of foreign buyers who predominantly don’t borrow here?” Mr Symond told a hearing in Sydney.
“They are getting an easier go to come and and gobble up what they want.
“I’m really concerned that there will be unintended consequences in the way APRA has gone about it.”
APRA introduced measures in late December that include requiring banks to contain growth in investment lending to 10 per cent a year.
Mr Symond said while Chinese investors are the biggest players in Australian real estate, major US and Canadian funds are also investing billions in Australian residential property.
Chinese investors who are unable to buy freehold property at home are attracted by the Australian market and measures such as a fee of $1000 per million dollars invested will not dissuade them, he said.
He said there is no strategy to ensure a reliable supply of new housing – now falling short by 25,000 homes a year in Sydney – while taxes make up 40 per cent or more of the value of a new-built home.
“Our fundamental problems haven’t been addressed to help first-home buyers today,” Mr Symond said.
“I feel like crying – in Sydney alone 200 suburbs where the median price has broken through a million bucks, Melbourne’s got probably close to 100 suburbs. What chance have young people got today?” Mr Symond said.
Mr Symond said the size of the deposit required and the inflated costs now included in new real estate have put huge obstacles in the way of people trying to break into the market, while investors and existing owners benefit from the situation.
“What we are seeing now is the emergence of the haves and the have-nots,” he said.
Mr Symond said foreign investors are buying up to a quarter of properties in some areas but warned that investors must not be forced out of the market by measures aimed at helping first-home buyers.
“So long as they don’t squash investors to the point where you lose investors, you lose developers, there’s no incentive to build (and) first-home buyers can’t afford it,” he said.
“There’s all sorts of ways you can tinker. But we don’t want to shut investors out. That will create an even bigger hole in the housing shortage.