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The impact of overseas investment on Australian

Real Estate prices


Introduction
The Australian economy has witnessed significant inflow of foreign investment in the recent
past. FIRB had approved 40,000 foreign proposals for investment in real estate in 2015-16
(Dallas, 2018). The major portion of the investment comes from China. FIRD data revealed that
in 2015-16, $32 billion of Chinese investment entered the country, which was 10% of the entire
market sale (Business Insider, 2017). The second highest investment came from the US at $8
billion. It Signifies China's influence on the real estate market in Australia.

Existing Study
According to the study of Wong (2017), foreign real estate investment is growing on in major
global cities and the main source is Asia especially China, which has the largest share. For the
context of Australia, with the growing housing demand of a large amount of immigrant in
Sydney has resulted in a flow of funds from China to the city. Furthermore, increased mobility
and globalization intensified the need for such investment. Sydney's Chinatown has transformed
into an unconventional way representing China's cultural scene. Less construction in the major
cities, the number of houses are limited, the rise in demand has led to quick price rise in a very
short span of time. The paper discusses a new finding that huge investments and price rise is
guided by many factors like cultural politics, geographical settings, and other local and global
forces.

Rogers, Lee, and Yan (2015) highlight that Sydney and Melbourne have been facing
affordability housing problem in the past which becomes more complex after the Global
Financial Crises 2008 when Chinese investors increased the demand for housing, resulting into
price rises. Also, the spending power of locals has been depressed and limited due to the
recession. The increase in prices has led to serious difficulties for the lower income class, China's
practices are contested by a few number of residents and journalists. However, so far, no major
impact has been made.

The rising proximity between the two countries allows easy movement of people. Large number
of Chinese citizens live in the country. Since, these people demand house, a price rise is just an
effect of rising demand and low supply.
References
ABC, 2019. Australia's fortunes are linked to China's economy — for better or worse. [Online]
Available at: https://www.abc.net.au/news/2019-01-15/china-economy-slowdown-will-affect-
australia/10716240 [Accessed 2019 May 2019].

Business Insider, 2017. Australian house price growth looks set to slow as foreign demand dries
up. [Online] Available at: https://www.businessinsider.com.au/australian-house-price-growth-
looks-set-to-slow-as-foreign-demand-drys-up-2017-7 [Accessed 20 May 2019].

Dallas, R., 2018. Australia's foreign real estate investment boom looks to be over. Here are five
things we learned. [Online] Available at: https://www.abc.net.au/news/2018-05-31/what-we-
learned-from-the-foreign-real-estate-investment-boom/9819302 [Accessed 20 May 2018].

Rogers, D., Lee, C. & Yan, D., 2015. The politics of foreign investment in Australian housing:
Chinese investors, translocal sales agents and local resistance.. Housing Studies, 30(5), pp. 730-
748.

Wong, a., 2017. Transnational real estate in Australia: new Chinese diaspora, media
representation and urban transformation in Sydney's Chinatown. International Journal of
Housing Policy, 17(1), pp. 97-119.