Are investors saturating the property market?
The impact of overseas investors on the Australian property market has been the subject of much debate in 2014 and as the year draws to a close, there's little sign of it slowing down.
Earlier this year marked the opening of the Inquiry into Foreign Investment in Residential Real Estate, which aimed to determine just how much of an impact overseas investors are having. Submissions were made by a variety of groups, each of which put forward its analysis of the current situation.
The House of Representatives Standing Committee on Economics conceded that first-time buyers aren't being priced out of the market, mainly because they are generally attracted to different types of houses for sale than investors.
Among those putting forward its views was the Real Estate Institute of Australia (REIA), which said that investors and first home buyers are competing in completely different price brackets.
In her submission, CEO of the REIA Amanda Lynch said: "The preference for foreign investors is at the higher end of the market, with a $1million average for established real estate for temporary residents, and a $647,000 average for individual purchasers of new dwellings."
Even though a direct link between rising property prices and overseas investor activity couldn't be established, this hasn't stopped the Australian Prudential Regulation Authority (APRA) from taking matters into its own hands. Earlier this month, it revealed that a number of steps would be taken to promote sound residential mortgage lending throughout Australia.
Among the areas of concern it will be taking a closer look at will be the rise in lending to property investors. Further assessment will help the group determine whether any future action needs to be taken to readdress balance in the market.
APRA stated that there has already been strong growth in lending to property investors, so it's important to gain a wider picture of the market to see what can be done to make the sector fairer.
Speaking at the Inquiry into Affordable Housing in October, the Reserve Bank of Australia's Assistant Governor for the Financial System Malcolm Edey reflected on just how strong investor activity has been.
National house prices have increased at a rate of around 10 per cent a year, while there has also been a rise in the rate of growth of investor finance. In many cases, this is already outpacing expansion in household incomes.
Whether overseas investors are playing a role in this is yet to be seen, but with APRA keeping its eye on the market, who knows what 2015 might have in store.