Foreign investment does not price Australians out of the housing market and is critical to getting new developments off the ground, an industry expert says.
State and local government bureaucracy, rather than foreign investment, is driving up property prices, the Property Council of Australia has told a parliamentary inquiry.
Restricting foreign investment would not make it easier for Australians to buy homes, as it would hold back supply, the council’s executive director of international and capital markets Andrew Minho said.
Restrictive planning laws added “extraordinary costs” to new developments, making foreign investment crucial for getting projects off the ground, Mr Minho said.
He said myths and untruths about foreign investment needed to be stamped out.
“Foreign investment does not push houses out of reach for Australians,” Mr Minho told the hearing in Melbourne.
“Foreign investment is critical for national growth … it is helping Australia to develop more homes into the market.
“We can tell you point blank that foreign investment is 4.6 per cent of the entire residential platform.
“That’s not significant enough to shift prices away from Australians.”
First-home buyers were not competing with foreign investors, as market entrants typically buy established properties and foreign investors buy new homes, Mr Minho said.
The real enemy to housing affordability was bad planning systems, restrictions on land supply, and crippling taxes and charges, he said.
“If you really want to reduce prices, reduce the taxes,” Mr Minho said.
The inquiry into foreign investment in residential real estate continues.