Foreign investment is enabling more new builds

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The effects of foreign investment in Australian real estate have often been debated. However, some firm evidence has been provided by the Foreign Investment Review Board (FIRB) and the Property Council of Australia to give us a definitive answer.

Commenting on the 2013-14 FIRB Annual Report, Property Council Chief Executive Ken Morrison noted that the significant increase in foreign investment highlighted in the document bode well for affordability concerns in Australia. When considering the cost of building your own custom home in Perth, the effects of overseas investment in the local market could have be beneficial.

“Every newly constructed home that a foreign investor purchases enables up to four other homes to be built, so this boost is good news for affordability,” said Mr Morrison in an April 30 statement.

“The only way to improve housing affordability is to get more housing on the ground earlier, and foreign investment is making this happen.”

Statistics from the report reveal that overseas investment in residential real estate in Australia more than doubled in the last financial year, reaching $34.7 billion, up from $17.2 billion in 2012-2013.

Mr Morrison noted in his statement that this investment is not in competition with local buyers, but rather gets the ball rolling for further activity in the construction industry. He found that for every newly built home purchased by an overseas party, four more properties were able to be commenced.

By paving the way for large developments and projects across the country, foreign investment is keeping the building industry ticking over. With more activity in the sector, costs are spread out, reducing the end price of construction for local residents. While a foreign buyer may not directly affect your luxury home building project, the capital they inject into the economy could keep down the cost of your materials and trades.

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