Sydneysiders are concerned that foreign investors, and particularly Chinese real estate investors, are pushing up housing prices, according to survey findings published this month. A majority believed foreign investors should not be allowed to buy residential real estate in Sydney.
The Federal Budget was the government’s latest attempt at navigating a policy solution that supports its pro-foreign investment position while responding to public concern about housing affordability in Australian cities.
China’s government is also searching for a policy solution to restrict the large amount of capital that’s flowing out of the country.
Almost 900 Sydneysiders were surveyed on their views on foreign real estate investment. The effectiveness of government regulations on foreign investment and investors was a major concern for respondents.
People aged over 18 living in the Greater Sydney region were asked about housing affordability, foreign investment, the drivers of Sydney housing prices, and perceptions of Chinese investors specifically.
Support for the government’s regulation of foreign investment in housing was weak. Only 17 per cent of respondents thought it was effective.
Almost 56 per cent believed foreign investors should not be allowed to buy residential real estate in Sydney and more than 63 per cent disagreed that the “government should encourage more foreign investment in greater Sydney’s housing market”.
These views stand in stark contrast to the government’s geopolitical support for foreign investment in Australia.
What’s significant about the survey results is that Sydneysiders have strong views on foreign investment, despite the absence of reliable evidence.
Participants’ concerns about foreign investors and investment were consistent with their concerns about the government’s foreign investment rules.
Around 63 per cent identified the Chinese as the heavyweights of foreign investment. This is likely to be accurate, given the concentration of Chinese investment in Sydney and Melbourne.
Other studies, however, have shown the potential for public confusion between domestic Australian-Chinese and international Chinese buyers.
Respondents were asked to choose up to three drivers of house prices based on their understanding of Sydney’s housing market. By far the most commonly nominated driver of house prices (64 per cent) was foreign investors buying housing.
Roughly one in three survey participants saw low interest rates (37 per cent) and domestic home owners (32 per cent) and investors (32 per cent) as the drivers of higher housing prices.
A strong message from the real estate and property development industries is that foreign investment increases housing supply, which in turn puts downward pressure on prices.
Politicians and lobby groups argue this will help improve housing affordability in major Australian cities. But many housing analysts argue that this supply solution does not stack up for purchases made by either foreign or domestic investors.
It seems that Sydneysiders don’t accept the real estate industry message about foreign investors increasing housing supply, and therefore helping to ease housing affordability pressures.
The government’s dilemma is how to manage foreign investment alongside an increasing housing affordability problem in major Australian cities.
The Federal Budget included a crackdown on foreign investors, but the government still supports foreign real estate investment.
Our survey results support other studies that suggest this pro-foreign investment stance must be accompanied by strategies to protect intercultural community relations. This must happen alongside efforts to improve housing affordability.
By Alexandra Wong