This is frustrating. From the AFR comes the Foreign Investment Review Board’s chairman Brian Wilson:
Mr Wilson said much of the public controversy about Chinese investors buying up residential real estate was “not necessarily malevolent” but not based on facts.
“Very often we might get a call that says a Chinese person has bought this house, how were they able to do so,” Mr Wilson told a House of Representatives inquiry into foreign investment in residential real estate on Friday.
“A lot of the time when we investigate their background, we find they are a citizen, they live here.”
“We don’t often have concerns about people of Greek or Italian extraction buying properties because they are not so easily identifiable at auctions.”
OK, are Greece and Spain the rising regional power with 1.3 billion residents, hugely growing influence over Australia, and by far the fastest growing segment of marginal foreign buyers in the property market? No. So that renders this argument a “false analogy”, just one of the many dialectical falacies that passes for argument in our troglodyte media.
What is most frustrating about this preachy drivel is that the public’s anger around the issue of foreign investment in property is based almost entirely around the ignorance generated by the failure of FIRB monitoring and data. Mr Wilson confidently declares that:
“If we have between 500,000 and 600,000 transactions a year, common sense says we’ll have 50,000 or 60,000 of those by people of Asian decent. And 20,000 of those will be legal temporary residents.”
Sure, but what about all of the other transactions that FIRB rules allow to go ahead in the existing property market? The only alternative source of data I can point to is the NAB property survey which canvasses industry insiders and it’s pointing to much higher levels of foreign buying activity than Mr Wilson suggests:
Mr Wilson is responsible for the very community disquiet he has decided to lecture.
Meanwhile, in a story I’ve been avoiding all day, the RBA commits another fallacy in its submission to the senate inquiry:
Foreign investors may be helping to push up the prices of some Australian homes, but are probably not crowding out first home buyers, the Reserve Bank says.
Amid anecdotal claims some local buyers are being priced out of the market by cashed-up overseas investors, a new submission from the central bank examines official data on the topic.
It says foreign investment in residential housing was at most 5 to 10 per cent of market turnover, and last year the government approved $17 billion in property investment from overseas, with most of the money funding the purchase and construction of new homes.
As foreign investors’ share of the market has remained fairly steady over the past two decades, the Reserve concluded overseas buyers were not the main reason for price rises over the period.
However, it conceded extra investment from foreigners could contribute to price rises because there were ”rigidities” in the supply of housing that meant there were not enough new homes being built to meet demand.
Why is the question confined to FHBs? That’s partial analysis if I’ve ever seen it. While foreign buyer activity may generally be higher than entry level, why are those who’d like to move up so irrelevant? And those higher prices won’t filter down to lower strata? Of course they will.
At least the bank acknowledged the wretched planning system which is the real the problem with all of this. So long as it remains and the cashed-up foreigner is the marginal buyer, then Australians have ever right to be concerned about the impacts on affordability.
