Foreign investment puts pressure on, planning changes needed

98Australia is proving itself when it comes to property, coming in at the second-most attractive country for investment among cross-border investors, according to CBRE’s Asia Pacific Investor Intentions Survey 2014.

Sydney was the third-most popular city for cross-border investment, after only Tokyo and Shanghai.

It’s clear that the city is a drawcard for foreign investors, with fantastic transport infrastructure in place as well as further projects underway, and not to mention quality education offerings.

Capital growth in the capital

Sydney house prices increased 0.77 per cent month-on-month in February 28 across all dwellings, with units showing a slightly higher increase of 0.99 per cent over the same period.

With dwelling values soaring 14.11 per cent year-on-year to February 28, the market is getting harder to get into for first home buyers, but there is a wealth of opportunity for savvy investors as well as those looking to sell in the capital.

Better planning needed

Despite some drawing a link between soaring real estate prices and overseas investment interest, Real Estate Institute of New South Wales (REINSW) President Malcolm Gunning has suggested that other forces are at play, according to a March 25 statement.

A treasury decision to investigate foreign investment in the context of the nation’s property market has led to commentary from the REINSW president.

“The fact that the government and the media are pointing the finger at foreign investors as the primary reason for increases in property prices and the affordable housing shortage is flawed,” explained Mr Gunning.

Mr Gunning has said that better incentives are required for first home buyers. However, he has also suggested the state’s property shortage is not being entirely driven by foreign investment and is instead the result of tricky planning and tax legislation.

Unfulfilled demand for property in Sydney has provided the ideal environment for investors as many people choose to rent instead of buying their first home.

However, projects on the fringes are helping to put downward pressure on property demand – it’s just a question of how fast planning approvals can keep up with it.

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