The Canberra-based Australian Treasury has recently divulged the results of a study which showed that the main factor for rising property prices in Australia is not, contrary to popular belief, investment monies from foreign buyers but the strong foundation of household formation in the country.
Perhaps it is a culture where citizens are keen to form new nuclear family units and to live in their own home which drives up demand for property, especially the main Aussie cities such as Sydney, Melbourne, Perth and Brisbane. The possible influx of foreign students in these cities could also mean locals are buying up properties to reap rental yields, thus pushing property prices upwards.
Since 2008, property prices have risen more than 50 per cent, but only A$122 (S$129) of the A$12,800 increase in overall prices per quarter were attributed to foreign demand. That said, a total of A$24 billion in real estate investment monies from Chinese buyers have been approved in the year ending June 2015. This year, some states have begun to impose transaction taxes on foreign purchases of Australian properties and the study done by the treasury may have excluded properties purchased by locals for their overseas family members and relatives.
Will demand, local or foreign, wane and if so, how soon? Will prices slide gradually or continue to remain stagnant at its current levels?