Especially China, the biggest group of foreign buyers in the Australian real estate market per the Foreign Investment Review Board, has been deterred from further investments. From 2015 to 2016, Chinese investors spent $32 billion, mostly in Sydney and Melbourne, four-times the amount US residents spent. Foreign investment in the past has been restricted to only new developments, but with recent regulations Rules for developers have changed too - now only half the dwellings in new developments can be sold to foreign investors. Additionally, the government has enacted charges of between 1.4-to-5.5 per cent — depending on the value of the property— as well as a vacant property tax of 1 per cent.
Keith Knutsson of Integrale Advisors commented, “Regulation on foreign investment certainly slows down asset management services in Australia, but building and construction contractors as well as property agencies will remain, with increasing strength, to be key suppliers to this low inventory market. Australia is continuing to look for those services, no matter where the capital originates from. Yet, enormous capital requirements might limit new entrants from entering the market.”