Text just in. Mate moves 2 NZ, needs 2 rent 5 b/room house, must be Akld GZ. sees 25 houses 23 are owned by “expatriate” Chinese.
â€” Selwyn Pellett (@SelwynPellett) March 19, 2014
Our politicians, particularly the more xenophobic of them, like to blame Johnny Foreigner for the rise in house prices.
The same is happening in Australia, with all manner of things like Chinese investors being blamed. The real reason though is somewhat different.
Labour and the Greens claim that restricting foreign investment and applying capital gains taxes will lower prices…and yet the opposite is true in Australia.
Foreign investors are not to blame for rising house prices. The real culprits are the taxing and regulating activities of Australian governments that raise the supply price of new housing.
Despite this, the House of Representatives economics committee is set to inquire into the impact of foreign investment on the Australian housing market at the instigation of Treasurer Joe Hockey.
According to committee chair Kelly O’Dwyer, the inquiry will consider whether the current restrictions on foreign investment in residential real estate serve to increase supply, as is their stated intention, or raise prices.
This is rather like asking whether foreign tourists increase the production of goods and services or raise consumer prices. The answer depends on how flexibly Australian producers can accommodate changes in foreign as well as local demand through increased output.