Questions emerge over foreign investment in Aussie property

A SENIOR Reserve Bank official has told a parliamentary inquiry that the evidence of foreign investors pushing up Australian house prices is unclear.

Residential and comercial buildings under construction in Sydney's CBD, Monday, June 2, 2014. House prices have suffered their largest monthly fall in five years, with the federal budget a likely contributor. . Picture: AAP Image - Joel Carrett

A SENIOR Reserve Bank official has told a parliamentary inquiry that the evidence of foreign investors pushing up Australian house prices is unclear.

The official spoke to the House economics committee in Sydney on Friday, after a series of revelations that buyers - particularly well-off investors in Asia - may be buying up inner city properties and forcing sales prices up.

But RBA assistant governor of economics Christopher Kent said there was "no way of knowing the exact extent to which this has been the case".

Chiefly, he said the lack of "comprehensive information" about the effects of foreign investors buying properties in Australia meant the evidence of effects on supply and demand was unclear.

He said recent rises in housing prices across the nation, averaging about 10% in capital cities but as high as 17% and more in some areas was primarily reflected by local factors including low interest rates.

"Notwithstanding general concerns about the responsiveness of supply, the information available suggests that foreign residential purchases have probably not had a large direct effect on the price of housing that is typically purchased by first home buyers," Mr Kent said.

"While incomplete, the Foreign Investments Review Board data and the information received through our liaison with developers suggest that most foreign residential purchases are for new, higher-density, inner-city properties as well as properties close to universities.

"Furthermore, the properties they purchase tend to be valued well above the average national sales price."

The Senate inquiry examining foreign property investment is due to report in October.