Almost 60 per cent of Australians believe foreign investor activity is responsible for booming property prices, with older Australians feeling strongest about the issue.
A new Galaxy Research survey of 1,006 people nationwide, conducted on behalf of non-bank lender State Custodians Home Loans, found 59 per cent of respondents believe foreign investor activity is pushing up house prices the most.
Older respondents feel the strongest about the issue with 69 per cent of those aged 50 plus nominating this factor, compared to 54 per cent of Gen X, and 49 per cent of Gen Y.
Additionally, those in the most heavily populated states of NSW (60 per cent) and Vic (63 per cent), where foreign investment has been a hot topic, feel this is the main issue compared to less populated states of WA (50 per cent), SA (54 per cent) and Qld (56 per cent).
Although debate has raged for the last few years on the exact impact foreign investors actually have on the housing market, the government recently took some action in the 2017/18 budget by restricting the number of homes for sale in any new development by half to foreign investors.
They also will slug a “ghost tax” on foreign buyers of up to $5,000 if they leave their purchased homes unoccupied or untenanted in a bid to alleviate pressure on tight rental markets.
Other factors Australians feel are increasing house prices are negative gearing incentives for property investors (41 per cent), and high costs like stamp duty and capital gains tax putting home owners off selling and buying, thereby limiting homes for sale (35 per cent).
Meanwhile, 32 per cent believe current low interest rates are merely encouraging more cashed up buyers into the market, driving up prices even further.
State Custodians’ general manager Joanna Pretty says the collective impact of so many forces at work is what’s really contributing to the housing affordability crisis, rather than any one thing in particular.
“It’s the perfect storm of numerous factors coming together which is shaping the market we are experiencing today,” she said.
“The budget changes will go some way to help regarding foreign investment levels, but then the other factors still exist. There is still a lot of work to be done regarding affordability in general.”
Other major concerns relate to population issues. Some 42 per cent of people believe that over population in major cities is pushing up demand. Another 28 per cent also feel there’s not enough overall housing stock on offer for the amount of people looking.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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