Concerns Raised About Foreign Investment in Australian Property Market

by Ray Clancy on February 20, 2015

in Australia, General Information, Property in Australia

There are calls in Australia for the government to enforce stronger rules regarding foreign people buying property.

Part of it has been fuelled by Indians and Chinese buying real estate as an investment amid warnings that it could push property prices beyond affordable for many first time buyers in particular.

property marketA parliamentary committee is the latest to call for amid a significant increase in foreign investment following recent amendments to trade agreements and Significant Investment Visas.

Treasurer Joe Hockey charged the House Economics Committee (HEC) with the task of investigating Australia’s laws around residential real estate investment earlier in the year.

After six public hearings and 92 separate submissions, the HEC found more transparency was needed to explain why there have been no reports of buyers breaching rules since 2006 and there are concerns that the Foreign Investment Review Board (FIRB) is not applying the adequate rules that are already in place.

‘There has been a significant failure of leadership at the FIRB, which was unable to provide basic compliance information to the HEC about its investigation and its enforcement activity,’ said HEC chairman Kelly O’Dwyer.

Four major weaknesses have been identified including the FIRB’s lack of timely data, its inadequate investigation and enforcement, its weak penalties and its lack of resources.

The HEC also made 12 recommendations that will limit resident non-citizens from purchasing recently built properties, giving the Australian immigration department more influence in the buying process.

However, some critics claim that the HEC’s report is an attempt to increase tax on foreign investment, driven by recent media condemnation. They want more modest compliance measures.

However, an explosion of Asian investment is expected in Australia’s property market in 2015 along with a 20% to 30% increase in Chinese investment.

 

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