The Foreign Investment Review Board (FIRB) Annual Report for the 2016-17 year was released this week and confirms the expected drop in the level of Foreign Investor activity in the Australian property market.
Vendors can no longer take it for granted that investors from China will be queuing for residential investments, or even buying sight unseen - and therefore have less chance of obtaining that windfall price.
The report confirms that the combined efforts of the FIRB along with State and Federal tax changes and surcharges for Foreign Investors have taken their toll with Chinese investors who are taking their investment dollars to neighbouring Asian markets rather than to Australia.
While China remains the most significant region investing here and is expected to continue as such - our Government needs to consider whether this will have the desired impact on housing affordability or it simply means this is capital that Australia is missing out on.
The report covers the second half of calendar year 2016 and first half of 2017. These half years were “like night and day in terms of Chinese investment,” said chief executive of Chinese property portal Juwai.com, Carrie Law. “In the second half of 2016 Chinese were investing in Australian real estate at an almost irrational pace. It was like money falling from heaven for vendors and developers. In early 2017 capital controls, financing restrictions, and foreign buyer taxes reduced Chinese investment to more reasonable levels.” The introduction of application fees for foreigners in late 2015 also saw the number applications by foreign buyers plummet more than 67 per cent in 12 months. The report outlines that the drop in applications is largely due to buyers only applying for properties they intend to purchase, rather than a drop in actual investment.