There's a familiar refrain in Australia when public discussion turns to the country's eye-wateringly expensive housing market: Foreigners are to blame.
Public figures from former Prime Minister Tony Abbott to populist entrepreneur Dick Smith to far-right Senator Fraser Anning all agree that immigration is a key reason why the country's homes are some of the world's priciest.
At the same time, housing appears to be a relatively minor issue ahead of the country's federal elections this month, with climate and the economy driving political debate instead.
That's less surprising when you consider that concern over overpriced accommodation may genuinely be receding. House prices are predicted to fall 20% in Sydney, according to National Australia Bank, and rents are now growing at the slowest pace in records dating back to the early 1970s.
The share of Australians saying that housing affordability is one of their top three issues has also fallen to its lowest level since before the last election in 2016, according to Essential Report polling.
Even for those on low incomes, things appear to be turning. While Sydney is still an alarmingly expensive city, the number of properties advertised for rent at 30% or less of a typical minimum-wage income has doubled in less than two years to more than a fifth of total advertisements, according to a report this week by Anglicare Australia.
One response might be to assume it's because the great foreign invasion has finally been beaten back. In truth, it's close to the opposite: The wave that broke across the country in recent years has bailed Australian governments and regulators out of their own policy mistakes.
Foreign -- particularly Chinese -- spending on Australian real estate has certainly been significant. Chinese investment rose more than 10-fold between 2010 and 2016 to hit A$32 billion (US$23 billion), enough on its own to represent nearly 15% of total reportable external investment in the country, according to data from the Foreign Investment Review Board (FIRB), a government regulator. In recent years, about a quarter of all overseas real estate investment has come from mainland China. That rises to a third or more if you include Hong Kong and Singapore -- popular conduits for mainland investors.
Yet that spending has had little effect on the existing housing stock because of restrictions on overseas investment. Foreigners are normally allowed to buy established homes in Australia only if they have a residency visa; they must sell when that paperwork expires. Such purchases rarely account for more than a percentage point or so of the almost 500,000 home sales taking place each year.
Where overseas money does make a difference is in new housing, for which the rules are much more open. In the five years through June 2018, the FIRB granted 97,000 approvals for foreigners to buy undeveloped residential properties, with a total value of around A$179 billion.
That's helped the country in two ways. First, home sales sit alongside tourism, education and the export of iron ore, coal, natural gas and gold as one of Australia's biggest sources of foreign capital. Perhaps more importantly, though, those inflows have led to a boom in home-building that's one of the main reasons the country's housing bubble is now gently deflating.
As we've written, the construction splurge between 2015 and 2017 was a unique period in recent Australian history when housing starts ran consistently ahead of household formation. That was driven heavily by two reviled categories of investors, foreigners and baby boomers, who encouraged a wave of apartment-building that's changed the skyline of the country's cities.
About 1.03 million homes were started in the five years through June 2018, an increase of 256,000 on the previous five years, according to data from the Housing Institute of Australia. The 97,000 approvals in the FIRB data account for about 40 percent of the excess, a sign that foreign capital led to more home-building than would otherwise have taken place.
Regulators for years sat on their hands rather than implement macroprudential measures to stop interest-rate cuts pushing the market out of control. They're fortunate foreign buyers spurred this increase in supply, so housing is rebalancing to become less ruinously expensive.
Election time in Australia is a time to blame foreigners, but the third of the population struggling to make ends meet in rented accommodation should heed that lesson. Regulators and politicians did too little to help make housing affordable. It's foreign investors and retirees who took the heat out of the property boom. ©2019 BLOOMBERG OPINION
David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies.