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RBA And Foreign Housing Investment

RBA And Foreign Housing Investment – The Reserve Bank is monitoring whether the government’s decision to relax rules on foreigners who buy local property is stoking a surge in house prices, Governor Glenn Stevens said.

The “question of the role of foreign purchases is an important one and it’s one we’re giving some attention to,” Stevens told a finance industry conference in Sydney today. “Hard facts” about the trend are difficult to find, he added.

Last year’s jump in house prices, which advanced more than 10 per cent, was among reasons Mr Stevens boosted the Reserve Bank of Australia’s benchmark interest rate this month for the fourth time in five meetings. Treasurer Wayne Swan eased restrictions on non-residents in late 2008, making it easier for foreigners to purchase properties without government approval.

“In an environment where the affordability of housing is very poor, perceptions that foreigners are fueling house prices could become an issue” for the government, said Shane Oliver, senior economist at AMP Capital Investors. Any sign that non-residents are adding to pressure on prices will “increase political pressure on the issue.”

A potential surge in foreign buyers could hurt the government’s efforts to make dwellings more affordable to Australians, particularly amid claims of a shortage in new housing. Prime Minister Kevin Rudd is due to call an election before April 2011.

Tags: affordability, Amp Capital Investors, australians, Bank Of Australia, Benchmark Interest Rate, Dwellings, Economist, Finance Industry, foreigners, Government Approval, house prices, kevin rudd, Non Residents, Perceptions, Prime Minister, Rba, Reserve Bank Of Australia, Shane, Treasurer Wayne, Wayne Swan
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