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Government policies cause of home price growth, not foreign investors

Date Posted: Aug, 2014

By Rich Harvey, CEO, propertybuyer.com.au

There's been a lot of talk in Australia of late regarding the role foreign investors, particularly Chinese home buyers, play in Australian property.

Some have celebrated the increased interest of foreign buyers, saying it's helped to raise the value of real estate. Others have bemoaned foreign interest, saying it has made it more difficult for average Australians to enter the market.

But according to a new report from The Centre for Independent Studies, both parties are wrong. Dr Stephen Kirchner wrote in a recent research paper titled Eight Housing Affordability Myths that it's government policies behind much of the increase in home prices the country has seen in past months.

"Australia has enjoyed strong incomes, population growth and lower mortgage rates, and these, together with a critical lack of new housing supply, have fuelled long-term increases in real house prices,' Dr Kirchner stated.

"Foreign investors and domestic investors have been made scapegoats when it comes to housing affordability, but they are no more to blame for rising house prices than first-home buyers. The problem is not too much demand, but too little supply."

On the bright side, those looking to buy property in Sydney will benefit from the Harbour City's current focus on new construction.

The latest State of the States report from CommSec showed that New South Wales is far and away the strongest state in the country for new home construction, with dwelling starts reaching 45 per cent above decade averages.

In fact, as of the March quarter, new dwelling starts were 19.6 per cent higher than they were the year before.

This should help people of all stripes, from first home buyers to home owners looking to downsize. With more stock on the horizon and price rises starting to cool, it's becoming more affordable for the average Australian to get a piece of the Sydney property pie.

And with an experienced buyers agent in your corner, there's no reason why you can't secure a prime piece of real estate for a fair price.