Crikey's Bernard Keane drills into the recent bout of xenophobia surrounding Asian hordes buying Australian homes. Get over it people—one in every four Australians was born overseas!
They FIRB policy change, which involved removing restrictions on foreign purchases of newly developed homes that were previously capped at 50%, was a smart one, especially considering it was introduced during the GFC when new housing supply production was near all-time lows (NSW building approvals got to their lowest levels since the 1960s).
The RBA has repeatedly noted that one of the chief problems on the supply-side of the housing market has been that banks are not lending to developers. And so, developers have not been producing supply because they cannot get financing to do so. The reason banks were (are) not lending to developers was (is) primarily because of concerns around the absence of sufficient demand for the new supply (a bit odd, I know, but this was 2008-09 and in the middle of the GFC when the banks got very risk averse and started rationing credit).
So if foreigners want to buy newly built housing and support developers (and in turn the banks lending to them) while increasing the supply of rental accommodation, I would have thought that is a very good thing. It should also help stop the social convention of compelling people into home ownership by improving their alternative rental options.
And for those who would like to see house prices fall, by far the best solution is to encourage builders and developers to boost supply.
