Investors swoop on property despite increased fees

It's been a bumper day for property auctions across Australia with record low interest rates fueling increasing demand.

real estate

(AAP)

More than 3300 properties went up for auction across the country. 1400 were in Melbourne, while Sydney had its biggest February sales roster on record with 788 listed to go under the hammer.

It's also the first weekend since the government announced proposed changes to fees and potential penalties for foreign property buyers.

For at least one of the winners bidders on Saturday, foreign investors aren't a major concern.

"If there are people who want to buy a place here and have the money to do so, that's their choice and all the best to them," said Weilee Tjio who bought a property in Sydney's inner city suburb of Pyrmont.

Capital Chief Economist at AMP, Shane Oliver, agrees that foreign buyers aren't inflating prices across the board.

"It's relatively small in the great context of things and it's concentrated. For example, it's mainly in Sydney and Melbourne and it's certain suburbs of those cities," he said.

"It's not the main factor driving property prices high. The main factor driving property prices high is simply the lack of supply on the market and, of course, relatively low interest rates. So it's Australians causing the poor affordability problem, not foreigners."

Mr Oliver says he expects interest rates to be cut further when the Reserve Bank meets on Tuesday.

"On the one hand, you've got the strength of the property market, particularly in Sydney. That's an argument to leave rates on hold and not cut again," he said

"Against that, we've got the rest of the economy. The other capital cities, for example, seeing relatively modest price growth. And more importantly, weakness in areas like business investment, overall economic growth and very low wages growth and low inflation. Those things are all arguing for another interest rate cut."

A final decision on foreign investment laws will be made after March 20.


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2 min read

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By Helen Isbister

Source: SBS


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