The affordability of houses for first-time homebuyers in Australia could actually be improved by the tsunami of investment hailing from the Asia-Pacific.
Contrary to both popular sentiment and hackneyed media reports, one leading real estate expert claims that the ongoing wave of Chinese investment in the local property market could actually be of benefit to affordability for Australian homebuyers.
Robert Pradolin, Australand General Manager of Business, is completely dismissive of the negative media hype surrounding the recent increase in property investment hailing from the PRC.
“The media’s hyped it up to make it bigger than what is actually is,” said Pradolin while speaking at the Property Council of Australia’s Future Directions event on foreign investment. “We’re creating this hysteria that all these Asian buyers are coming in and buy all the existing property – I reckon it’s all just bullsh*t.”
Pradolin notes that many alarmist media reports overlook existing regulations concerning investment in residential property by foreign nationals, as well as oftentimes colour the issue a way that could have highly negative social ramifications.
“I remember the Mayor of Monash was on the Channel 9 news on a Sunday, saying that all these Asian buyers were attending auctions and buying up houses at them…it’s actually illegal for foreign buyers to buy at auction, and assuming that the outliers are only a small number, they’re probably just Australian residents of Asian origin.
“The fact that they say they can’t speak English – well I can tell you that my parents fifty years ago couldn’t speak English, so what does that tell you about Italians and Greeks who came over back then.”
Contrary to the widely held view that overseas investment is pricing Australian homebuyers out of the marketplace, Pradolin believes that Chinese spending could actually be improving the affordability of residential property because of its impact on supply.
Pradolin notes that even under current regulations the upshot of mass foreign acquisition of residential property should be a supply expansion.
“Foreign investors can only buy new property, so they have to buy apartments on the plan, or a house and land on the fringes, or if they buy an existing property, they must buy or build more than one dwelling on it,” said Pradolin. “So my view is all the new supply is due to foreign buyers actually buying and adding to the old stock.”
Pradolin further points out that restrictions concerning the sale of residential properties by foreign owners should also have a positive impact on supply.
“The question to think about it when they come to sell their properties they can only sell to locals. They cannot sell to another Asian investor.”
If Pradolin’s speculations prove correct, the end result of Asian investment in Australian property should actually be the opposite of popular perceptions – increased affordability.
“I think foreign buyers are actually helping affordability by providing additional stock that we wouldn’t actually buy if it was sold into our market,” said Pradolin.
“It’s not stopping first home buyers from buying property – it’s actually helping the rental market to reduce the pressure on levels, because in the long-term they have to sell to locals, and that has to put a downward pressure on prices.”