Australia still attractive for overseas buyers, despite price rises

Photo credit: 8LettersUK

Prices climbed approximately 10 per cent last year, while Sydney saw property values surge 14 per cent, with Knight Frank highlighting Australia as one of the most overvalued countries in the world.

Nonetheless, developer Crown Group says Australia remains a "very attractive" market to invest in for those from abroad.

The builder's comments follow concerns among locals that this international interest is fuelling the price hikes. Recent data from the Reserve Bank, though, responding to the cries, has found that while foreign investment accounted for $17 billion in 2013, it was no more 10 per cent of the total market turnover. Indeed, most of the money funded the purchase and building of new homes.

With continuing low supply, though, the bank admitted that the steady demand from overseas could be contributing to the growing values, but not to the extent that some have claimed, with first home buyers not being pushed off the property ladder by foreigners.

"Given this sluggishness, part of any increase in foreign housing demand may spill over into higher dwelling prices, though the data suggest that this has not been into the parts of the market where Australia's first home buyers are typically concentrated," the bank told the Sydney Morning Herald.

That shortfall of property in the face of demand, meanwhile, is exactly what Crown Group argues makes Australia such a good place to invest for international buyers.

"Sydney has a vacancy of 1.7 per cent and that’s extremely low because there’s a supply crisis. So when you put that in perspective — we have low interest rates, a growing population, supply shortage and a lack of developers or builders — Sydney becomes a very attractive place to invest in," the group's CEO Iwan Sunito Sunito told TODAY.

“Even though many foreign buyers are coming into Australia," he added, "for new apartments in the country, 70 per cent of purchases come from local buyers. That shows the strength of local demand."