Misconceptions abound about foreign investors in the Australian housing market, and their role and influence in the market is exaggerated, according to Australia’s largest apartment developer.
Meriton sells around 1,000 apartments each year, around 75 per cent of which are sold off-the-plan. Most of its developments are within 10 kilometres of the Sydney, Gold Coast and Brisbane central business districts.
This gives Meriton some insight into the role that offshore investors have in Australia’s housing market.
The purchasers of Meriton’s properties fall into three brackets – owner-occupiers, domestic investors and investors that require the approval of the Foreign Investment Review Board (FIRB).
Last year 57 per cent of buyers were owner-occupiers and domestic investors accounted for 30 per cent of the apartments sold. FIRB investors took up 13 per cent, 70 per cent down from 2012, noted James Sialepis, Meriton’s national sales manager.
In 2012, FIRB investors bought 22 per cent of Meriton’s apartments. Owner-occupiers and domestic investors accounted for 50 per cent and 28 per cent respectively.
The year before that, domestic investors were the predominant buyers, snapping up 46 per cent of the new apartments. FIRB investors had purchased 13 per cent and owner-occupiers bought 41 per cent.
Around 95 per cent of the FIRB buyers come from China. The remainder are from Singapore, Malaysia and Indonesia, Sialepis said.
Education a huge selling point
They’re buying Meriton’s apartments to provide somewhere for their children to live while they’re studying in Australia, or because they intend to migrate to Australia themselves or simply for investment diversification. In all cases, Australia is seen as a safe option because of the political and economic stability.
The average price of an apartment in 2011 was $590,000 and $625,000 in 2012. Last year the average price was $700,000.
“Education is a huge selling point in Australia, especially with the universities in Sydney and Melbourne, coming from middle-class and rich families,” said Sialepis. “Also recent local property restrictions in China have been a factor, and the new wealth, especially in the middle classes.”
Australia isn’t the only property market on their radar screen. They’re also purchasing properties in Canada, the US and the UK.
“I think spreading fears about China and the effect on home prices is exaggerated,” Sailepis said. “Our figures show an average of 15 per cent.”
More data please
As Sailepis sees it, people who are only selling a few apartments a year are making sweeping statements that are only true for the particular pocket of the market they see. Meriton can only speak for its segments of the market so what it sees will be completely different from what a property developer in say Parramatta or the Hills district will observe.
It goes back to the point that more data on foreign ownership of property is necessary.
Sialepis has been selling apartments for 20 years and during that time offshore investors have always had a presence. Earlier on the investment came from Indonesia and then the Japanese entered the market.
The benefit of the Chinese buying in Australia is that they’re purchasing long-term, sending their children to university here and “sowing seeds for the future.” he said.
Chinese developers are also entering the market and creating jobs in Australia.
Written by Marion Williams for the AB+F Journal.
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