In a recent article in The Age (Melbourne), it’s been reported that major builders and developers on Melbourne’s urban fringe are selling up to fifty percent of some of their new housing estates to overseas investors and those hoping to migrate to Australia.

There are two prominent groups of overseas investors; They are the direct investors who are investing for capital growth and rental income and the other group who is trying to gain ‘points’ to qualify for migration to Australia.
Victoria’s largest home builder Simonds Homes noted that half of the 2,500 lots in the western suburbs such as Sanctuary Lakes, and Point Cook were sold overseas. These areas are popular because of the close proximity to Port Philip Bay and they are only 23km from the Melbourne CBD.

While foreign buyers help to boost new housing supply, it also helped create jobs in Victoria so it’s not negative thing altogether. Overseas investors in particular those from China are attracted by the fact that they actually own that piece of land(freehold) compared to what they are used to back home in China. These completed homes are then rented out for investment purposes.

And for those seeking to migrate to Australia for a better lifestyle and education for their kids, their purchase of new homes actually help them earn ‘points’ to qualify for permanent residency in Australia.

Australia’s foreign investment laws also encourage overseas investors to invest in Australia with the aim of increasing new supply to the overcome the shortfall that has caused real estate prices to rise perpetually in the last few years.

However, it’s been reported that such a phenomenon has its downside as well.

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