Recently released figures by the federal government in Australia have led to calls from many to tighten restrictions on overseas investors in the country. The body has revealed that during 2009, foreign property investment accounted for A$14.9 billion worth of houses and land.
The news has prompted a number of criticisms from Australian natives who want to see new rules preventing overseas buyers from monopolising the market.
In the last few years, the market down under has been attracting a lot of attention from individuals looking for global real estate investment opportunities
and with price increases of 20 per cent over the past 12 months, it has proved to be a lucrative choice.
Demand for property in the country remains high because of the economic crisis, which has caused both the government and the building industry to struggle to keep up with the country's growing population.
According to research conducted by economist Saul Eslake, property developers have been squeezed for funds over the last couple of years and as a result Australia is currently building fewer houses per head of population growth than at any time on record.
Meanwhile, earlier this year, mortgage experts predicted that 2010 would be a fruitful year for the country's property market, with investors looking to capitalise on the rapid growth.
Mark Hewitt, general manager of sales and operations at leading mortgage broker Australian Finance Group, said investors looked to property because it is considered a safer sector than the unpredictable share markets and did not have the same uncertainties as other forms of investment. "Investors are returning to property investment
. They have been coming back since the middle of last year to take advantage of a tight rental market," he explained.
However, if the Australian government decides to implement further measures to limit the sale of property to foreigners the period of austerity could soon be over.
It announced that it would be adopting a "more stringent approval process" to ensure that fewer homes could be purchased by non-Australians after acknowledging that this had contributed to the sudden rise in prices. Foreign buyers could soon be forced to sell when they leave the country or face heavy penalties.
Individuals who invested early in the Australian property market are sure to be reaping the rewards of their gamble now, but with prices already inflated, new regulations to be introduced and fears of a bubble forming
, it seems unlikely that investors will be able to reap such lucrative returns for much longer.
- Tuesday 25 May 2010