Urban Taskforce warns against xenophobic review of Chinese investment by federal government

The Urban Taskforce has said the federal government's review of foreign investment in residential real estate must be blind to the nationality of the foreign investor.

"While this review is said to consider foreign investment in residential real estate, we fear that the review will focus on Chinese investment.

"Focusing on a particular country’s investment is counterproductive and dare we say, xenophobic," Urban Taskforce Australia chief, Chris Johnson warned.

He said the Urban Taskforce urges the standing committee to consider foreign investment generally.

"It must resist pressure from those who would have us believe that it is simply Chinese investment in real estate that is driving increases in the cost of housing.

"Media coverage on this matter has been one- sided, suggesting that there is a flood of unregulated money from China causing real estate prices, especially in Sydney, to soar.

"The claims are that foreign investment, in residential real estate, particularly from China is on the increase," he said.

Their submission said foreign investment in residential real estate was on the decline.

"The evidence provided in the recent Foreign Investment Review Board Annual Report 2012-13 does not support claims of ever increasing foreign investment.

"For instance, total foreign investment in residential property in Australia has actually been falling from a high of $20.92 billion in 2010-11 to $19.7 billion in 2011-12 to $17.2 billion in 2012-131.

"Reports based on the Foreign Investment Board and Australian Bureau of Statistics data suggest that the Chinese contribution of the total foreign investment in residential real estate to be approximately $5 billion per annum.

"However this is in a market that saw $250 billion in residential property being sold.

"While 2% of the market is a worthy contribution to new housing, it is not considered to be at a level to warrant the community concerns and intense media scrutiny of late.

"There is no doubt that residential property investment from China is the highest with Chinese investors purchasing $5.9 billion in all real estate, which includes commercial real estate.

"It should be noted that commercial real estate is almost twice that of foreign investment in residential real estate.

"Other countries invest in Australian real estate.

"Canada invested just under $5 billion in Australian real estate and the Americans invested $4.4 billion.

"Based on these figures alone, the focus on Chinese investment is not warranted," Chris Johnson suggested.

"Notwithstanding any of the above, the overarching principle of Australia's foreign investment policy, as it applies to residential property, is that the investment should increase Australia's housing stock.

"We support such a policy and agree that it brings benefits to the local building industry and its suppliers.

"The data provided in the Foreign Investment Review Board Annual Report 2012-13 shows this.

"In the 2010-11 reporting period only $3.77 billion of foreign investment went to existing housing while $12.54 billion went to new developments."