Purchase of residential property by foreign buyers, particularly from China, has eased over the past year because of tighter capital controls by Beijing and limited access to local finance, a top central bank official has said.
Foreign buyers account for about five per cent of total housing sales in Australia, including between 10 to 15 per cent of new construction, and around 25 per cent of newly built apartments, according to the Reserve Bank of Australia's head of financial stability Jonathan Kearns.
Around three-quarters of the foreign buyers come from China, he said in a speech to an Australia-China property conference on Monday.
"Purchases of new properties by foreign buyers have eased over the past year, reportedly because of stricter enforcement of Chinese capital controls and tighter access to finance for foreign buyers," Mr Kearns said.
Australia currently allows temporary residents to buy existing dwellings for residence but non-residents are only allowed to buy newly-constructed dwellings.
The role of foreign property buyers has come under the spotlight as rising property prices limit affordability for first-time home buyers, and comes amid warnings by regulators of rising household debt.
Purchases by foreign buyers do not reduce the overall supply of dwellings available to local residents and, in fact, may actually contribute to expansion of the housing stock, Mr Kearns said.
"Foreign buyers in Australia for work or study would have been renting if they did not purchase. Others rent the property as an investment and so contribute to the rental stock," he said.
While the strength of the local property market and participation by foreign buyers has drawn some foreign developers to Australia, they remain a small part of the market, he added.
Mr Kearns said the RBA had been closely watching loans to residential property developers as a surge in apartments recently completed and under construction raises the risk of price falls.
