Foreign Investment and Residential Property Price Growth
Chris Wokker and
John Swieringa ()
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Chris Wokker: Treasury, Government of Australia
No 2016-03, Treasury Working Papers from The Treasury, Australian Government
Abstract:
This study uses fixed effects panel regression techniques to estimate the impact of foreign demand for Australian residential real estate on property prices. All model specifications find a positive relationship between foreign investment approvals and price growth at the postcode level, but the majority of price growth experienced in recent times does not appear to be attributable to increased foreign demand. This is unsurprising given that in the short run the supply of residential property is relatively fixed so any increase in demand, whether domestic or foreign, should result in higher prices. Indeed, there have been many other significant domestic drivers of property prices over the period examined. The majority of foreign investment approvals are for new as opposed to established dwellings. This provides some indication that, in the longer-term, foreign demand is increasing property supply consistent with Australia’s foreign investment framework.
Keywords: Foreign Investment; Residential Real Estate; House Prices (search for similar items in EconPapers)
JEL-codes: F21 R31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2016-12, Revised 2016-12
New Economics Papers: this item is included in nep-ure
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