How widespread is foreign property buying?

Advertisement

By Leith van Onselen

Almost daily now I am reading media articles on how foreign nationals are buying-up established housing across Australia, pushing up values and pricing-out locals.

For example, yesterday the Central Coast Gosford Express Advocate reported the following about how Chinese nationals are purchasing homes across the New South Wales Central Coast:

Chinese investors have hit the Coast’s property market hard this year, driving up suburban prices to record highs.

Real Estate Institute of NSW vice-president and Raine & Horne Terrigal-Avoca Beach general manager Brett Hunter said the trend was part of the next real estate cycle.

“Part of this is much greater interest in Chinese buyer attention on the Coast,” Mr Hunter said…

ScreenHunter_7654 Jun. 05 09.56

Ms Harris, who came to Australia from China in 2003, cited the sale of a property last month at Gertrude St, North Gosford, as an example­ of increased Asian buyer interest.

“Out of the 14 offers for it, 11 of them came from people with an Asian background,” she said.

“The sale price ended up being more than $150,000 over the asking price of $500,000. The level of interest from Chinese investors over the past 12 months has been phenomenal.”

She said the Federal Government’s foreign property investment fees of up to $10,000 were not a deterrent.

Many of her China-based clients paid cash for properties of up to $1 million…

A similar article also appeared yesterday in News.com.au, which explored how foreigners are buying up pre-existing homes in Dover Heights, Sydney:

Advertisement

A WINDING road that starts near Bondi Beach has become Australia’s priciest street after the average value of properties there jumped more than $300,000 in a just a year.

Military Road in eastern suburb Dover Heights now has more homes worth a million dollars or more than any other Australian street — even those in Point Piper, the nation’s most expensive suburb, according to data from Onthehouse.com.au…

Dover Heights selling agent Deborah Terley of Position Realty added that much of the recent buying activity in streets like Military Road has come from investors.

“Recently there has been a lot of interest from overseas buyers. The street is one of the few in Sydney with views of the ocean, harbour and city,” she said…

And of course, who can forget this gem from two weeks ago:

A terrace in Surry Hills that is only slightly wider than a queen-sized bed fetched almost $1 million auction on Saturday…

The two-bedroom house, which measures 2.85 metres wide and is on a 38-square-metre block in Terry Street, sold for $965,000…

ScreenHunter_7435 May. 26 10.08

The winning bidder was buyer’s agent Raymond Hung, who was bidding on behalf of a client in China.

ScreenHunter_7436 May. 26 10.09
Advertisement

It is important to highlight, once again, that non-residents are supposed to be barred from purchasing pre-existing Australian homes, whereas temporary residents are required to sell their Australian homes within three months once they depart Australia.

Clearly, from the frequent anecdotal evidence presented in articles like the above, Australia’s foreign ownership rules are being flouted with regular occurrence.

Hopefully, recent enforcement activities by the Australian Taxation Office, which has taken over responsibility for enforcing Australia’s foreign ownership rules, will stamp out this flagrant disregard of Australian law.

Advertisement

[email protected]

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.