Offshore buyers cannot be blamed for a lack of affordable housing, RBA assistant governor Christopher Kent has said.
Rather, arduous planning processes, a lack of land and residents unwilling to accept higher-density housing in their neighbourhoods contribute to a housing undersupply, forcing up prices.
Low interest rates have fuelled a local buy up, which has also raised prices.
Speaking to the federal government’s inquiry into foreign property investment on Friday, Kent said the 10 per cent rise in house prices was largely home-grown.
“The rise in prices has primarily reflected increased housing demand from Australian residents and citizens, partly owing to low interest rates,” he said.
“The supply of housing is responsive to a rise in housing demand but, given the time needed to plan and build new housing, this typically occurs with some lag.”
A shortage of well-located land, geographical constraints in our capital cities, complex planning processes and concerns of existing residents in regard to new development projects in their vicinity were dragging down future supply.
Mr Kent also said a lack of data from the Foreign Investment Review Board made analysing the impact of investment difficult, however the board’s role primarily was compliance regulation rather than information gathering.
“A case could be made for more timely provision of the approvals data that are already collected by FIRB, perhaps publishing them on a quarterly rather than annual basis,” he said.
“Also, more granular data could be provided, such as the number of approvals within broad price brackets rather than just the total value and number of approvals.”
The House of Representatives Standing Committee inquiry into foreign investment residential real estate has heard submissions in Canberra and Melbourne ahead of its Friday sitting in Sydney. Apartment developer Harry Triguboff and RP Data research director Tim Lawless were scheduled to speak later in the day.
The Australian Financial Review