{"id":6960,"date":"2016-02-09T01:00:02","date_gmt":"2016-02-08T14:00:02","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6960"},"modified":"2016-02-09T01:00:02","modified_gmt":"2016-02-08T14:00:02","slug":"greedy-foreign-investors","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/greedy-foreign-investors\/","title":{"rendered":"\u2018Greedy foreign investors\u2019 – Michael Yardney"},"content":{"rendered":"

 
\nForeign ownership of Australian property has become an emotionally charged issue. But do so called \u2018greedy foreign investors\u2019 really push up property values?\u00a0Michael Yardney<\/strong><\/a>\u00a0from Metropole Property Strategists\u00a0shares his thoughts on that question.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin<\/b>:\u00a0 Foreign ownership of Australian property has become an emotionally charged issue: only look back at all the discussion that happened last year. Of course, there is nothing new about foreign investment in Australia. It dates back to when we first became a colony and has continued ever since, but there were some changes made last year.
\nI want to have a look at those and also get an expert\u2019s opinion on what that means for property in Australia. Michael Yardney joins me from Metropole Property Strategists.
\nMichael, firstly just tell us what the FIRB changes meant last year and how do you think they\u2019re going to impact the market.
\nMichael<\/b>:\u00a0 Kevin, I think it came around for a couple of reasons, but I guess as the property markets in Melbourne and Sydney grew very strongly last year, in particular, many were pointing their finger at foreign buyers.
\nBut really, foreign buyers have been restricted: nonresident foreign investors aren\u2019t allowed to buy an existing home; they can only buy new homes, apartments, off-the-plan properties, or vacant properties. Or if they\u2019re living in Australia for no more than 12 months, they can buy a home and then they have to sell it.
\nThere was the presumption, that hasn\u2019t been proven, that some people broke these rules so in December last year, the Foreign Investment Review Board brought down some strong penalties, some financial and even jail terms for people who broke the laws, and they gave an amnesty period of about six months for people who had already broken them to sell off the properties without any of those fines.
\nKevin<\/b>:\u00a0 What are they buying, Michael?
\nMichael<\/b>:\u00a0 Last year, the National Australia Bank\u2019s survey showed that in the September quarter, 19% of all new apartments, 15% of all new homes, were purchased by foreign buyers. This was significantly up from the past. In Victoria, in particular, foreign activity was significantly higher than that.
\nInterestingly, what raised some eyebrows despite the restrictions on foreign investment was that the NAB survey also found foreign investors accounted for a significantly higher number of established property purchases.
\nKevin<\/b>:\u00a0 Michael, there is a lot of emotion about this issue, and I mentioned that at the outset. Are foreign investors really pushing up property prices because this is one of the arguments, isn\u2019t it?
\nMichael<\/b>:\u00a0 Of course, it is. Our relatively cheap Australian dollar, a new middle class of Chinese people who fear the future a little bit and are looking for a flight of security for their money to accompany where there\u2019s a safe economic, safe political environment has definitely caused people to invest in Australia. They have different criteria than the local investors, but that doesn\u2019t necessarily mean that foreign buyers are pushing up our markets.
\nResearch last year by the University of New South Wales showed that offshore Chinese purchases totaled just 2% of all the transactions in 2014. Kevin, this figure is so low, it would really be hard to argue that foreign investment is driving up affordability around Australia. What are they driving up? Off-the-plan and the new property markets, but not all around, not your home and my home.
\nKevin<\/b>:\u00a0 There are pros and cons to all issues, Michael. Do we really need foreign investment?
\nMichael<\/b>:\u00a0 I think what happened was the Australian government\u2019s policy was to encourage foreign investment in residential real estate because number one, they wanted to increase the supply of housing for our growing population, and clearly, it\u2019s doing that. But they also wanted construction to shore up our economy as the mining boom started to dwindle down, and it\u2019s done that as well. But I guess with the up side, there are probably some down sides.
\nKevin<\/b>:\u00a0 What is the down side? Are there any?
\nMichael<\/b>:\u00a0 I think currently, we\u2019re now going to get an oversupply of apartments, especially in the CBDs of Melbourne and Sydney because the foreign developers are building sometimes the wrong sort of properties with different criteria and they have different levels of funding. They\u2019re going full steam ahead, building some properties and we\u2019re going to end up with too many of them. Too many of them are going to be a bit small, poor standard, and I see that they could be the slums of the future.
\nI think the other problem is that we\u2019re now getting a large number of those big monoliths that are almost 100% owned by investors, not owner-occupiers. I think this is going to create competition for tenants, and it could create a period of quite a number of years of no capital growth or rental growth in those big inner city markets. I think the oversupply is going to stifle those.
\nI think the other thing is that some local investors have gotten a bit carried away seeing all these other properties being sold to foreigners and hopping on the bandwagon maybe a little bit too late.
\nKevin<\/b>:\u00a0 What are some of the signs, I guess, or what should local investors be wary of?
\nMichael<\/b>:\u00a0 I think they should avoid locations that are predominated by foreign investors. This is no disrespect to the foreign investors, but I think the problem is imagine those big high-rise buildings where they have an owner\u2019s corporation meeting and all the owners are overseas. I don\u2019t know one new high-rise building that hasn\u2019t had water issues with their balconies. Imagine trying to get the levies out of all these overseas investors.
\nI see some issues with that so avoid those sort of buildings, and avoid locations close to where we\u2019re going to have an oversupply. I believe there are still opportunities in 2016 in real estate, but maybe not in those new and off-the-plan high-rise markets, Kevin
\nKevin<\/b>:\u00a0 Good advice. Michael Yardney from Metropole Property Strategists.
\nMichael, thank you for your time.
\nMichael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Foreign ownership of Australian property has become an emotionally charged issue. But do so called \u2018greedy foreign investors\u2019 really push up property values?\u00a0Michael Yardney\u00a0from Metropole Property Strategists\u00a0shares his thoughts on that question.   Transcript: Kevin:\u00a0 Foreign ownership of Australian property has become an emotionally…<\/p>\n","protected":false},"author":176692471,"featured_media":4617,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,17,25],"tags":[101],"class_list":["post-6960","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment","category-sponsored-channels","tag-podcast"],"yoast_head":"\n\u2018Greedy foreign investors\u2019 - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/greedy-foreign-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u2018Greedy foreign investors\u2019 - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  Foreign ownership of Australian property has become an emotionally charged issue. But do so called \u2018greedy foreign investors\u2019 really push up property values?\u00a0Michael Yardney\u00a0from Metropole Property Strategists\u00a0shares his thoughts on that question.   Transcript: Kevin:\u00a0 Foreign ownership of Australian property has become an emotionally...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/channels.realty.com.au\/realtytalk\/greedy-foreign-investors\/\" \/>\n<meta property=\"og:site_name\" content=\"Realty Talk\" \/>\n<meta property=\"article:published_time\" content=\"2016-02-08T14:00:02+00:00\" \/>\n<meta name=\"author\" content=\"rolanrush\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rolanrush\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/\"},\"author\":{\"name\":\"rolanrush\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"headline\":\"\u2018Greedy foreign investors\u2019 – Michael Yardney\",\"datePublished\":\"2016-02-08T14:00:02+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/\"},\"wordCount\":1033,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"keywords\":[\"podcast\"],\"articleSection\":[\"Buying a property\",\"Kevin Turner\",\"Kevin's Update\",\"Latest Stories\",\"Property Investment Topics\",\"Sponsored Channels\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/\",\"name\":\"\u2018Greedy foreign investors\u2019 - Michael Yardney - Realty Talk\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"datePublished\":\"2016-02-08T14:00:02+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#primaryimage\",\"url\":\"\",\"contentUrl\":\"\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/greedy-foreign-investors\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"\u2018Greedy foreign investors\u2019 – Michael Yardney\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\",\"name\":\"Realty Talk\",\"description\":\"Your Trusted Voice For Property Investing. 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