Foreign interest in the purchase of new dwellings has dropped from $72.5b in 2015-16 down to $25.3b in the year ending 30 June 2017, as per the Foreign Investment Review Board Annual Report released today.
Nicholas Proud, CEO of PowerHousing Australia, which represents 31 of Australia’s largest Tier One CHP providers of social and affordable housing, said "foreign investment in new residential real estate has been underpinning the growth in supply to record levels and has been critical in creating new dwelling delivery which has put a lid on house prices.
"This retreat of foreign investment applications is an emerging factor for interest in Build to Rent from the large inputs into new housing delivery.
"Of interest, ABS Building Approvals as of March are still sitting at 220,000 for the past year, which is still 60,000 dwellings above the 15-year average annual build rates. That said, the foreign investment interest is still well ahead of historic levels of activity.
"Whilst this foreign component is still a large component in new dwelling demand, the key challenge that emerges is, can an affordable housing Build to Rent component play a larger role to maintain steady supply in the coming years? Particularly as an affordable housing component is still a new input that could be more broadly adopted in major new developments.
"PowerHousing will work this question through in the coming months prior to an election, urging both sides of Government to deepen the nations’ understanding on the patterns of supply into the housing market and particularly shoring up and incentivising a percentage of affordable housing in new developments.
"With some new elements announced nationally around the $75 billion rolling 10-year national infrastructure plan, there is real future potential for affordable housing initiatives to be incentivised from the value uplift created by these projects," Mr Proud said.
(a) Comprises approved proposals where the proposed investment is to be undertaken in more than one state or territory.
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