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Foreign investment in Australian residential properties: House prices and growth of housing construction sector

Hassan F. Gholipour (Swinburne Business School, Swinburne University of Technology, Melbourne, Australia)
Hooi Hooi Lean (Economics Program, School of Social Sciences, Universiti Sains Malaysia, Penang, Malaysia)
Reza Tajaddini (Swinburne Business School, Swinburne University of Technology, Melbourne, Australia)
Anh Khoi Pham (Colliers International and Western Sydney University, Sydney, Australia)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Article publication date: 15 March 2019

Issue publication date: 20 March 2019

1099

Abstract

Purpose

The purpose of this study is to examine the impact that foreign investment in existing houses and new housing development has on residential house prices and the growth of the housing construction sector.

Design/methodology/approach

The analysis is based on a panel cointegration method, estimated using annual data for all Australian states and territories spanning the period of 1990-2013.

Findings

The results indicate that increases in foreign investment in existing houses do not significantly lead to increases in house prices. On the other hand, a 10 per cent increase in foreign investment for housing development decreases house prices by 1.95 per cent. We also find that foreign real estate investments have a positive impact on housing construction activities in the long run.

Originality/value

Existing studies used aggregate foreign real estate investment in their analyses. As foreign investment in existing houses and foreign investment for housing development have different impacts on the demand and supply sides of housing market, it is crucial that the analysis of the effects of foreign investment in residential properties on real estate market is conducted for each type differently.

Keywords

Acknowledgements

The authors acknowledge that this study was supported by the 2015/2016 AFAANZ/SIRCA Research Grants from the Accounting and Finance Association of Australia and New Zealand (AFAANZ) and SIRCA.

Citation

Gholipour, H.F., Lean, H.H., Tajaddini, R. and Pham, A.K. (2019), "Foreign investment in Australian residential properties: House prices and growth of housing construction sector", International Journal of Housing Markets and Analysis, Vol. 12 No. 2, pp. 166-180. https://doi.org/10.1108/IJHMA-05-2018-0030

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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