> I'm not saying foreign investment plays no part in such markets, but that its relative contribution has always been overstated. If anything it has been under

> I'm not saying foreign investment plays no part in such markets, but that its relative contribution has always been overstated. If anything it has been understated. 1) House pricing is incredibly demand sensitive. A sustained 10% drop in demand would crash house prices. 2) Local buyers expect capital gains. It is the reason they buy. Rental returns on Sydney property for example are roughly the same as fixed deposit rates. Where do buyers expect these capital gains to come from? For the most part from rich foreign investors (and to a lesser degree very wealthy immigrants). This means a large fraction of the local investment market is also driven by foreign actors.