The following is a recent article from the AFR.

In essence there is a beat up from many of the commentators in the article. In my view we need foreign investment to provide the capital to keep the property market moving forward. Without the foreign investment we would have less projects getting off the ground leading to tighter supply and significantly higher price growth which would price more local buyers out of the market.

The rental affordability would crash without foreign investment as the property purchases are for rental purposes which helps maintain the growth  of new rental properties which is needed to house the growing population. Without foreign investment we would run the risk of the property market repeating the tragedy on the late 1980's when the then treasurer Paul Keating removed the negative gearing tax break.

Yes, the growing level of foreign investment will lead to rising prices of new off-the-plan properties which in turn will drag up the price of existing properties but at a slower rate than if we had a supply shortage from not having foreign investment. There will be eds and flows as high levels of new stock comes onto the market but in in my view in the medium term it will flatten out.