Canada’s decision to shut the door on foreign buyers could prove a bonus for the Australian property market, according to experts.
Ray White Chief Economist Nerida Conisbee said the move could make Australia more appealing to foreign buyers, which could particularly aid the rental and construction sectors.
Ms Conisbee noted foreigners could only buy new and not established homes in Australia.
In Canada, the government has implemented a two-year ban on overseas buyers purchasing residential property in a bid to make more homes available and affordable for locals facing a housing crunch.
Ms Conisbee said buyers from Hong Kong would be particularly affected.
“There’s quite an established Hong Kong community in Canada that’s been growing since Hong Kong was handed back to China,” she said.
“New Zealand has also got a ban on foreign purchasers, so the opportunities to buy in a few different countries is now closed.
“So Australia would be seen as a viable option.”
Ms Conisbee said while foreign buyers were often given a bad rap, buyers from overseas who purchase new Australian homes benefitted the education, construction and rental sectors.
“We know that a lot of foreign buyers do buy here for their children to study, so that could potentially have positive flow-on (effects),” she said.
“Foreign buyers get a bad rap from the mainstream media because they’re seen as pushing prices up, but the reality is most apartments in places like North Ryde, Parramatta and the Melbourne CBD would not have gotten up if we didn’t have foreign buyers, because of how much they rely on pre commitments.
“We also have shortages of rental housing and foreign buyers are definitely one source of that.”
He said he didn’t expect thousands upon thousands of foreign buyers to look to our shores but he said there would be some that did.
“Australia is a very safe place for international investors to put their money into property, and it could be that with less choice out in the world market for them, they will turn their attention to the Australian market if Canada is closed for business for the time being,” he said.
Mr Groves said there were hurdles for foreign investors to clear to buy in Australia, including taxes, stamp duties and more costly Foreign Investment Review Board approval, but stressed it was a required part of the market.
“We do need foreign investors in Australia, for sure,” Mr Groves said.
“We need it for the rental supply. Rental affordability is the challenge of our times. It remains a significant challenge across Australia and, unfortunately, governments haven’t quite got it right.
“They’re looking at the tenant protection side of things as a fix and it’s not working because investors are fleeing the market.”
Mr Groves said traditionally Australia didn’t have a strong history of encouraging foreign buyers, but he noted there was no reason to be fearful of it as long as there were checks and balances to ensure issues, such as land banking or apartments sitting empty, didn’t occur.
“We don’t wanna see those sorts of outcomes and certainly encourage policy settings in Australia that make sure foreign investors are actually making their properties available for the rental market,” he said.