Experts are now saying that new taxes, credit restrictions and the market downturn in Melbourne are behind the severe drop in foreign investment while the tougher restrictions being enforced by the Foreign Investment Review Board have had a lesser impact. Melbourne still remains the number one target for foreign property buyers in Australia, However.
This was reflected in the latest report by the FIRB which showed overseas buyers were only given credit approval for $11 Billion to spend on residential real estate in Victoria down from 28 Billion in years prior.
Nerida Conisbee chief economist at realestate.com.au was quoted saying, “The fact they’ve stopped investing isn’t because they’re not interested. They’re struggling to get finance,” and that “They’re also concerned about the direction of the market. A lot are sitting on their hands.”
Also important to this is the extra taxes that are now levied on foreign buyers, most notably the Victorian Government hiking foreign buyer stamp duty surcharge from 3 per cent to 7 percent which has had a negative effect on potential foreign buyers.