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Driven by neoliberalism, worldwide housing privatisation and commodification as well as deregulation of financial markets have transformed housing from a social good with low degree of liquidity into an investment asset, the demand for which increasingly reflects the value of housing as a source of and repository for wealth. Especially, along with globalisation, the integration of the deregulated financial market and the globalised real estate makes the housing industry no longer a local or regional business, while the properties can be supplied locally and demanded internationally. Subsequently, the cross-border investments in housing have increased considerably and raised a number of concerns in receiving nations.
In the face of increasing transnational capital flows in the global housing market, different countries have diverse foreign investment policy settings, the openness of which varies greatly. Australia, as one of the most popular investment destinations, used to have quite open foreign investment policy environment which encouraged global demand for housing largely, in its major capital cities in particular. However, since late 2015 and early 2016, both federal and state governments launched a series of tightening regulations targeting foreign housing buyers, which changed the environment of foreign investment significantly.
This paper, through reviewing Australia’s foreign investment policies in the past decade, analysing desktop data during the same examined years, and conducting interviews with sales agents, financiers and developers in Australia, attempts to 1) investigate the underlying drivers attracting cross-border investment to housing market across Australia, 2) explore how these ‘pull factors’ varied before and after the changes of foreign investment policy settings, and 3) analyse if the tightened policies impeded foreign homebuyers’ activities and helped improving housing affordability in Australia.
The paper concludes by highlighting wider research and policy implications to understand the impacts brought by foreign investment, informing better policy and practice outcomes in the post-COVID recovery era.