The FIRB has revealed a fall in foreign investment in new apartments in Australia.Source:Supplied
FOREIGN investment in Australia’s housing market has fallen, amid waning investor appetite and tighter lending standards.
OFFICIAL data has confirmed a collapse in approvals for foreign investment in Australia’s housing market, amid waning investor appetite, higher charges and tighter lending standards.
The Foreign Investment Review Board’s annual report reveals a 67 per cent fall in residential real estate approvals last financial year — down from 40,149 approvals to 13,198.
The value of FIRB approvals also plunged, from $72.4 billion to $25.2 billion in fiscal 2017.
The report reveals 18 per cent of approvals to foreigners were for residential real estate in Queensland in 2016-17.
Victoria and New South Wales remained the favourite destination for investment, accounting for nearly three-quarters of all approvals granted.
The FIRB said a significant factor contributing to the reduction in approvals was the introduction of application fees from December 2015.
“The introduction of fees resulted in investors only applying for properties they intend to purchase,” the report said
“Prior to the introduction of fees, individuals often made several applications earlier in the process when considering multiple properties, even though they might have only ended up purchasing a single property.
“This suggests that the resulting reduction in approvals may not imply a corresponding a reduction in actual investment in residential real estate. That is, the actual decline is likely to be lower than implied by the data.”
Along with the introduction of state-based taxes on foreign investors, the FIRB said weaker demand from China was another factor behind the decline in approvals granted.
Investment in new apartments from mainland Chinese investors dropped significantly in 2016-17.
AllenWargent Property Buyers chief executive Pete Wargent said the figures would have some significant impacts on the new apartment sector, construction trends, and the broader economy — especially in Sydney.
Mr Wargent said he expected Sydney to experience the greatest number of failed apartment projects, with increasing signs of discounting on new apartments.
“Perhaps this was an inevitable end-game for this cycle, where development has been too much skewed towards apartments for investors, and too little towards the types of medium-density dwellings that people want to reside in,” he wrote in his blog.
But Chinese international real estate website Juwai.com chief executive Carrie Law played down the reported decline in Chinese demand.
Ms Law said that in the second half of 2016, Chinese buyers were investing in Australian real estate at an almost irrational pace.
“It was like money falling from heaven for vendors and developers,” Ms Law said.
“In early 2017, capital controls, financing restrictions, and foreign buyer taxes reduced Chinese investment to more reasonable levels.
“Since November 2017, we seem to have entered a period of more sustainable long-term growth.”
Ms Law said Chinese buying enquiries for Australian property in March were 5.7 per cent higher than the month before and in April they were 22.3 per cent higher.
“Unfortunately, this year’s FIRB data is not directly comparable to that of prior years, due the change in regulations and buyer behavior,” she said.
“The big declines are partly due to lower demand, and mostly due to the changed application fees.”
Queensland Attracts UK Property Seekers
Research by realestate.com.au showed that searches for property in Queensland climbed by nearly a third in December compared to the same period in the previous year. This was driven largely by British people who are flocking to one of the most populous states in the country, according to a report by news.com.au.
The study found that property searches originating from the UK increased 31%, with the Sunshine Coast suburbs of Noosa Heads, Buderim and Mooloolaba as popular picks among potential buyers.
New Farm, Redcliffe and North Lakes, meanwhile, topped the list of the most in-demand suburbs in Brisbane.
Nerida Conisbee, Realestate.com.au chief economist, said Queensland, specifically its beachside properties, held the top spot in terms of total search activity among UK property seekers.
“The Hemsworth impact seems to be impacting the view of Byron Bay with this the most searched by UK property seekers in December 2018 — the number tripling from December 2017,” she said.
Universal Buyers Agents Director Darren Piper said that the chaos surrounding Brexit in Britain was enticing overseas buyers to explore the Australian property market.
“House prices in London have fallen for the fifth quarter in a row. It’s natural for investors to look for safe havens in times of uncertainty,” he said.
Australia’s property market has consistently grown over the past decade, with homes in Sydney, Brisbane and Melbourne reaching record prices.
“It’s the perfect time for people to get their foot in the door and it’s a great time as a homeowner to explore your options, maybe make a move or stay the course,” said Piper.
Where it’s cheaper to buy than rent: It’s Ipswich’s time to shine
SHUT out of the Brisbane market? Don’t despair. You can still bag a bargain in Ipswich as it shakes off its stigma as the city’s poor cousin.
IT HAS played second fiddle to Brisbane for years, but finally, it is Ipswich’s time to shine.
Long regarded as the river city’s poor cousin, the “Switch” has shaken off its stigma and is forging a name for itself as the state’s property bargain capital — where you can get a house for less than your weekly rent.
New figures from realestate.com.au have revealed the suburbs across Queensland where it is now cheaper to buy than rent and eight of the top 20 are in the Ipswich growth corridor.
In Ebbw Vale, where the median house price is $248,500, it works out to be $386 cheaper to own a home in the suburb than to rent one.
And in the burgeoning masterplanned community of Ripley, where it costs $1600 a month on average to rent of home, it only costs $1230 a month on average to own one.
It comes as Brisbane’s housing market has recorded its strongest annual rise in rents in three years.
After months of flat growth in rental properties, analysis of the latest CoreLogic data by realestate.com.au shows house rents increased 2.4 per cent in 2018, while the cost of leasing a unit became 2.6 per cent more expensive.
A rare combination of low interest rates, a rising population and fewer investors and new developments is starting to put upward pressure on rents in the sunshine state and industry experts say now is the time for long-term renters to buy.
Realestate.com.au chief economist Nerida Conisbee said the only way was up for rents in the city, as underlying demand in the Brisbane market began to absorb rental supply.
Ms Conisbee said she was surprised by the “sheer number of suburbs” in greater Brisbane where it was cheaper to buy than rent.
“There’s quite a large number of them,” she said.
“Now is actually a good time to look to buy because we are looking to see further increases in rental levels.
“The reason being we have fewer new developments going ahead and also fewer investors in the market.”
Caitlin and Bryn Williams decided to buy a home in Ripley when they realised they could pay about the same in loan repayments as they were in rent.
After previously renting in Ipswich, they bought a brand new, four-bedroom house for just over $350,000 in the Ecco Ripley estate, where stage one of the $1.5 billion Ripley Town Centre has just been completed.
“We’re happy not to be renting anymore,” Mrs Williams said.
“What we were paying in rent, we were paying off someone else’s mortgage.”
Ripley is on track to become Australia’s biggest masterplanned community — home to 120,000 by 2041.
CoreLogic figures show the suburb’s median house price has grown by nearly 20 per cent in the past 12 months.
Mohammad Bassiri of Ray White Springfield Lakes said people were starting to realise it worked out cheaper or just as expensive to buy a home in the Ipswich region as it was to rent one.
Mr Bassiri said a friend of his recently moved from a rental at Springfield Lakes to buy a three-bedroom house at South Ripley for $320,000 because he realised the mortgage repayments were the same as his rent payments.
WHERE IT IS CHEAPER TO BUY THAN RENT IN QLD
Suburb Median house price Monthly loan repayment Monthly rent Difference
1. Lamb Island $110,000 $405 $997 $592
2. Macleay Island $182,000 $669 $1,192 $523
3. Russell Island $165,000 $607 $1,083 $476
4. Kilcoy $272,000 $1000 $1,452 $452
5. Mundoolun $576,000 $2,118 $2,548 $430
6. Laidley $237,500 $873 $1,300 $427
7. Woodford $327,250 $1,204 $1,603 $399
8. Plainland $375,000 $1,379 $1,768 $389
9. Ebbw Vale $248,500 $914 $1,300 $386
10. Ripley $335,000 $1,232 $1,603 $371
11. One Mile $242,500 $892 $1,257 $365
12. Blackstone $314,000 $1,155 $1,517 $362
13. Leichhardt $243,375 $895 $1,257 $362
14. Lowood $251,750 $926 $1,278 $352
15. Brendale $270,000 $993 $1,343 $350
16. Riverview $238,500 $877 $1,213 $336
17. Cedar Vale $498,000 $1,832 $2,167 $335
18. Goodna $310,500 $1,142 $1,473 $331
19. Loganholme $381,900 $1,405 $1,733 $328
20. Redbank $329,000 $1,210 $1,538 $328
Originally published as Where it’s cheaper to buy than rent
Labor Unveils $6.6bn Affordable Housing Plan to Build 250,000 New Homes
Labor has announced a ten-year plan to build 250,000 new homes across Australia, including 20,000 during its first term in government if it wins the election.
The $6.6 billion investment would see 250,000 new homes for low income and working families, key workers such as nurses, police, carers and teachers and women over 55, the fastest emerging group of Australians at risk of homelessness.
Subsidies of $8,500 per year would be offered to investors building new homes in return for cheaper rent for eligible tenants.
Opposition leader Bill Shorten unveiled the multibillion-dollar plan in his address yesterday at Labor’s three-day national conference in Adelaide.
“Building more affordable housing is infrastructure policy. It is cities policy. It is jobs and productivity policy,” he said.
The plan would see a family paying the national rental average save up to $92 each week.
“When you provide an affordable home for hard-working people, you give them the level playing-field and fair start they need,” he said.
Shorten said Labor would work with the states and territories, local councils, and community housing providers to make sure the rollout of homes were built “where they’re needed most” and would “go to the people who need them most”.
“Not foreign investors, nor international students.”
The new homes would be accessible for all ages and for people with a disability, with Shorten describing the new homes as “more energy efficient, meaning lower power bills”, also offering a rental discount of 20 per cent.
Describing Labor as a “party of home ownership, and a party of affordable housing and community housing”, Shorten used the speech as an opportunity to call on industry super to “step up” and invest in affordable housing projects.
And of course, the opposition leader touched upon the hotly debated campaign election issue: negative gearing.
“This is a boost for renters and for the liveability of our growing suburbs… Alongside our plans to make negative gearing fairer, it will drive a boom in construction jobs and apprenticeships,” Shorten said.
A recent report published by the Australian Housing and Urban Research Institute (AHURI) found Australia needed to triple its social housing by 2036, faced with a shortfall of 433,000 social housing dwellings.
Property industry bodies welcome Labor’s announcement
Property Council chief executive Ken Morrison welcomed the incentives, but said they are “no substitute” for the supply of housing which is funded by 2.1 million property investors, “including those who access negative gearing”.
Housing affordability remains a critical issue for many Australians, an issue Morrison says is often overshadowed in the media by Melbourne and Sydney’s cooling markets.
“It makes sense to harness the investment capacity of the private sector to deliver affordable housing,” Morrison said.
“Labor’s incentives for investors to deliver affordable housing will make a contribution to meeting that need while also providing a boost to our construction industry, a key driver of economic activity.”
Planning schemes, land supply, and property taxes, which make up around 25 per cent of the cost of a new house are all part of the housing affordability mix, Morrison added, “there is no single ‘silver bullet’ solution”.
Urban Taskforce chief executive Chris Johnson said many different approaches are needed to tackle the hugely complex housing affordability issue.
“State and territory governments still have a responsibility to ensure that enough appropriately-zoned land is available in inner-ring suburbs to ensure sufficient housing supply,” Johnson said.
“Infrastructure levies must be kept under control to ensure that these do not add to the cost of housing production.”