Australians have a deep-seated fear that house prices are being driven up and property is being bought by foreign investors, particularly the Chinese, according to a study of almost 900 people in Sydney.
The research findings from the November 2015 study, just published in the Journal of the Australian Geographer, found a high level of public concern and discontent about foreign investment.
More than half of the Sydneysiders believe government regulation of foreign investment is ineffective and that rich Chinese investors are a big influence on the market.
Dr Dallas Rogers, at the University of Sydney’s School of Architecture, Design and Planning, says this is the first time individual opinions of Australians have been recorded about the impact they believe foreign investment is having in their communities.
“The recent federal budget saw the government come down hard on foreign investors, which demonstrates the dilemma that the government is facing as it attempts to manage foreign investment alongside a disenchanted Australian public,” says Dr Rogers.
“Historically there has always been cultural tension over land and home ownership in this country that began with the arrival of British settlers in the late 1700s, the Chinese gold rush in the 1850s, and the White Australia policy in the early 1900s.
“In the 2000s, we again face significant societal change due to economic, political and social forces from Asia which, given its proximity to Australia, is reshaping our cities.”
Home prices surged almost 20% in Sydney and 15.5% in Melbourne over the last year.
The 2017 federal budget brought in a new foreign investment levy of at least $5,000 a year on foreign investors who fail to either occupy or lease their property for at least six months each year.
And the government also restored a requirement that prevents developers from selling more than 50% of new developments to foreign investors.
The Sydney study used an online survey to record the views of people ranging from 18 to 65 years old, posing questions about housing affordability, factors influencing house prices, views about foreign investment and the perceptions of Chinese investors.
Foreigners are to blame
More than 64% of respondents cited foreign investors as the main reason for driving up house prices, despite little data on the inflationary impact of foreign investment on property.
However, hard data doesn’t match the concerns.
A National Australia Bank study in 2016 shows that Australian residents and investors still make up a greater proportion of real estate buyers in Australia. Only 14% were foreign investors.
The other most cited triggers for driving prices were low interest rates (37% of respondents), planning (36%) and local residents/domestic investors (32%).
The sale of established properties plays a big role in shaping housing prices overall but there are conditions placed on foreign investors.
Foreign investors can buy new properties, but can only purchase established homes if they meet certain criteria, such as a property that will be used for foreign student accommodation.
More than 56% of survey respondents are concerned about foreign investors and investment, disagreeing that they should be able to buy residential real estate in Sydney.
This concern is consistent with public views of foreign investment policy, with 63% of respondents disagreeing that the government should encourage more foreign investment.
Another 52% believe that the government has not regulated foreign investment in real estate effectively.
About 63% identified Chinese as the majority of Sydney investors, which is likely given Chinese investment is concentrated in Sydney and Melbourne but within particular suburbs.
However, Dr Rogers says there is potentially public confusion distinguishing the Australian-Chinese buyers from Chinese foreigners.
Chinese investors are seen as super-rich (58%) by those surveyed. However, NAB’s 2015 housing report shows that 53% of foreign buyers in NSW purchased properties under $1 million.
Dr Rogers says Australia has a long history of Chinese cultural tension.
“The Australian government has dealt with racism, immigration and land disputes for well over 200 years now,” he says.
“Currently, however, there is concern about cultural profiling and the stigma of Chinese investors in Australia.
“The skills and cultural contribution of migrants to Australian society are so often overlooked by an ingrained historical desire to achieve the great Australian dream of home ownership.”
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