Foreign investors push house prices up

Real estate agents are reporting strong demand from offshore investors since the Australian federal government relaxed its foreign investment rules for residential property early last year.

Some real estate agents have started setting up offices in China and arranging "property tourism" to tap into the demand for Australian investment properties. Local property buyers in Australia are said to be missing out on houses due to higher bids from overseas investors.

Professor Steve Keen from the University of Western Sydney has criticised the government's decision to open the door for more foreign investment in local real estate.

"If houses aren't for the people in their own country, then who the hell are they for?" Dr Keen asked.

"And if you let incomes in other countries determine your prices, all you're doing is importing a bubble," he said.