The AFR and The Australian are today running articles warning that the Abbott Government’s planned crackdown on foreign investment into residential real estate (summarised here) could “shock the market”. Here’s The AFR:
Ray White Real Estate chairman Brian White said the plan, announced on Wednesday, which will raise $200 million, was a shock.
“The amounts now proposed have the potential to shock the market – and no market appreciates or responds well to shocks,” he said…
CBRE residential projects chairman Justin Brown also said the new taxes were counterproductive and ill thought out…
But Melbourne-based buyers advocate David Morrell said the fees were not high enough…
And The Australian:
The Property Council of Australia’s chief executive, Ken Morrison, said the changes were counterproductive and a breach of faith from the government that would deter foreign investment…
The Urban Development Institute of Australia’s national president, Cameron Shephard, said “the fees proposed in the discussion paper are clearly excessive, and if implemented would really just constitute a new tax”…
Melbourne real estate agent Jun Lu described the changes as “short-sighted” and the “wrong strategy”…
Simon Henry, the co-founder of property portal Juwai — which markets property in Australia and other Western markets to Chinese buyers — said foreigners buying at auction would be charged a fee for each property they sought approval on, regardless of whether they secured it or not.
“It could add 50, 60 or $80,000 with still no result at the end,’’ he said. “That’s going to make it difficult for foreign investors to buy anything other than new, off-the-plan, FIRB-approved properties.”
So lots of disparate views there ranging from ‘it will shock the market’ to ‘it won’t make much of a difference’ to ‘it will make it difficult for foreigners to buy anything other than a new property’.
What is most hilarious about the whole thing is that over the past few years, many within the property industry argued that foreigners represented only a tiny proportion of sales and were not materially influencing the market nor pricing first home buyers out.
However, now that the crackdown has been announced, suddenly some are claiming that it will have a major detrimental impact on foreign demand, prices and construction.
I guess when it comes to protecting your own vested interest, one needs to bend the truth whichever way they can.
Personally, I found Simon Henry’s testimony most encouraging. If the new rules can prevent foreigners from buying pre-existing dwellings, then that’s a huge win for local would-be buyers and a strong endorsement of the new regime.
