Funds from foreign investors in residential property are usually pretty unregulated, even though Australia welcomes foreign cash injection into the nation. The developer takes the cash on a ‘no questions asked’ basis, as a lot of investors simply pay cash outright for the purpose of developments which are off the plan. Australia runs the risk of accepting funds which could be dirty money due to the lack of paper trail. Higher profit margins could be made by developers on towers of high scale as compared to homes for single family with a yard (Nicoletti, 2003). Developers are under a pressure to fit people effectively on the small piece of land available, as land is increasingly becoming the prize commodity. But, not all the people wish to live in the buildings of high-rise apartment.
There is another negative impact associated with residential construction industry is that there is a possibility of an artificial ramp up in the prices due to higher foreign investor demand which would drive the complete housing sector being unaffordable to everyone. There are many factors which are associated to the rise in the unit median and house prices – one of them is foreign investors. But, there could be a possibility of illegal housing facilities being built or in house crowding as any contribution to making high-demand property exponentially more expensive for occupants. It is in this case where high-demand properties are being made expensive from the outset by the foreign investors and also for a part of the urban Australians like new immigrants, students and low-income earners. If they can not afford the rent on their own then they have to resort to the option of last resort which is overcrowding.