Foreigners still expected to buy almost 9% of homes in Oz despite new restrictions, survey suggests

by Ray Clancy on August 2, 2010

Buying a house

Foreigners still expected to buy almost 9% of homes in Oz despite new restrictions, survey suggests.  Foreigners will buy around 9% of all homes for sale in Australia over the next year despite attempts to check the number of overseas buyers.

A new law in April restricted foreign investors to new property only and also meant that temporary residents, including expats, could only own property while they live in the country and have to sell on leaving.

Although some analysts think though the change is responsible for a drop in auction clearance rates, especially at the luxury end of the market, it is unlikely to put a lot of people off buying.

A survey by the National Australia Bank showed that respondents expect some 9% of real estate to be bought by overseas buyers in the next 12 months especially as there is no restrictions on off plan property.

The NAB survey involved a range of property professionals from real estate agents and managers to property developers, asset fund managers, owners and investors.

NAB chief economist Alan Oster said he was surprised by the result. It would mean that out of 520,000 properties expected to sell in a year some 47,000 would go to foreigners.

‘We wondered about the figure, but that is what a range of property people told us,’ Oster said.

The restrictions on foreigners buying existing homes in Australia had been lifted in 2008 to stimulate the market during the global economic crisis but were reintroduced as a way of slowing down the market.

However, the Real Estate Institute of Australia claimed that the Foreign Investment Review Board did not police the relaxed buying rules effectively.

‘REIA undertook a survey which showed that agents, particularly in Melbourne, were suspicious of the number of foreign entrants into the marketplace and whether those entrants were strictly adhering to guidelines,’ president David Airey said.

He backs the restrictions but says there is too much onus on real estate agents to make sure the guidelines are followed.

The NAB report also forecasts a fall in price expectations for the next 12 months across all capital city markets and says that owner occupiers will continue to dominate the market, accounting for almost 47% while investors would buy more than 29%.

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