Potential foreign investment in Australian residential real estate saw a dramatic decline last financial year.
The Foreign Investment Review Board’s (FIRB’s) latest annual report released on Tuesday has revealed that residential real estate approvals fell to 13,198 in 2016–17, from 40,149 in 2015-16, a decline of 67%. The value of these approvals also dropped significantly, down to $25.2bn from $47.2bn a year before. According to FIRB, approvals are indicative of potential rather than actual investment.
The government advisory body said application fees introduced at the end of 2015 have significantly contributed to this decline. “Prior to the introduction of fees in December 2015, 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.”
Other factors include China’s greater scrutiny on outbound investment, and the introduction of state based taxes on foreign investors.
Meanwhile, figures also reflected the government’s goal to attract investment that boosts housing supply. The proportion of all residential real estate approvals for development remained relatively stable in comparison to the previous year and represents around 88% of the value of all residential approvals in 2016–17. These include approvals for new dwellings, vacant land and redevelopment of existing residential property that increases the housing stock.
When grouped by state and territory, nearly three-quarters of all residential real estate approvals were for purchases in Victoria (41%) or New South Wales (32%).
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