The skylines of Australia’s east coast capitals – Melbourne, Sydney and Brisbane – are littered with cranes. High-rise residential construction is quite literally going vertical.
But who’s buying them?
ANZ, in a research note released today, think they have the answer.
ANZ notes Australia’s Foreign Investor Review Board (FIRB), reported that in the first three quarters of the 2013/14 fiscal year foreign investor approvals for new housing were approximately $A19.3bn. Annualised, this figure equates to $A26bn, some 2.5 times greater than the amount reported in 2012/13.
Investigating that increase further ANZ discovered “While approved foreign investor housing purchases have remained relatively steady as a share of total housing sales in recent years (at around 10% of total sales turnover) the increase in foreign investor new housing development in 2013-14 almost fully accounts for the 8% increase in total Australian new dwelling investment over the period “.
That’s right. The boom in residential construction, a large component of Australia’s economic rebalancing, is almost entirely been driven by foreign investment in residential property.
So how would residential construction look without this foreign investment?
Flat from levels of five years ago, based on their assumptions.
That’s a pretty telling statistic.
While foreign investment in new housing will raise questions on how the construction boom will address housing affordability, without it, Australia’s economic rebalancing act would likely be teetering.
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