No foreign dwelling buyers
I've posed the question several times here as to where everyone is going to live as immigration resumes, given that new arrivals into Australia tend to be renters initially.
The Foreign Investment Review Board's 2021 Annual Report provided little new information to change that view.
Over the past decade new-build apartment projects have largely been funded by superannuation fund investors and non-resident investors, mainly from China.
Neither cohort is buying heavily any more as credit has tightened.
And as the HomeBuilder stimulus impact recedes we're heading squarely for a chronic shortage of rental dwellings.
The number of FIRB residential real estate approvals fell another 38 per cent in FY 2021 to sit at the lowest level in a decade-and-a-half.
The value of FIRB residential approvals also crashed another $6.7 billion lower to just $10.4 billion.
The comparative figures for previous years may not be directly comparable for various reasons, but when I ran the charts in 2016 the equivalent figure was above $72 billion.
I used to analyse out the numbers by state and development type, but the residential investment figures are now so small they aren't going to move the needle in any event.
Queensland picked up some investment in new residential developments, but overall the figures were a massive fizzer for residential property.
Commercial real estate projects attracted the bulk of foreign interest and approvals in that sector surging to $82 billion as the economy rebounded.
What's happened here?
Firstly, there's barely any lending to non-resident investors for residential property these days.
Once common among even larger lenders, regulation has effectively shut this lending channel down.
Secondly, punitive state stamp duty surcharges and taxes have also hugely discouraged foreign buyers.
Thirdly, Australia's relationship with China has cooled over recent years, while the ongoing absence of Chinese international students has disrupted one of the possible channels for investment.
And fourthly, COVID-19 restrictions and border closures dissuaded some prospective buyers from travelling to inspect projects and developments.
Somehow the various policymakers may need to take a look at allowing non-residents to invest in new residential properties again.
Aussie landlords tend to steer clear of new apartment projects these days due to the increased risk of loss on resale.
Meanwhile residential vacancy rates continue to plunge towards zero.
