Wayne Tseng, founder of the Chinese Chamber of Property Investors, which represents Chinese property investors – both local and foreign – has raised concern at the blame being heaped upon Chinese investors for inflating property values and pricing-out locals. From The Herald-Sun:
Mr Tseng said members of the community felt “frustrated” at the current debate around foreign investment and accusations that they were responsible for rising property prices, and that their voices weren’t being heard.
“A lot of the ruling public sentiment is that [Chinese] are the ones pushing up prices, but in all honesty it’s only in defined pockets,” he said.
“What we do know is they are purchasing new developments, and their investment funds these developments, and the stamp duty that gets charged off each purchase goes to fund infrastructure.
“In a way they do feel a bit frustrated that they don’t have a voice.”
Let’s be honest. The angry reaction against Chinese investors has arisen because of the complete and utter failure of Australia’s foreign investment regime to prevent illegal purchases of pre-existing homes. Zero official data has been collected on the residency/visa status of property sales, and zero prosecutions or divestment orders took place for eight years, despite widespread anecdotal evidence of illegal foreign purchases.
As revealed by NAB’s June quarter Australian Residential Property Survey, which is the only source of data available, foreign buyers – mostly from China – accounted for around 10% of established home sales nationally in the June quarter, with Melbourne and Sydney most affected:
Given that Australia’s foreign ownership laws generally preclude non-residents from purchasing established homes, it stands to reason that significant illegal investment is taking place, thereby helping to push-up home values.
To make matters worse, both the the Paris-Based Financial Action Task Force (FATF) on money laundering and the Australian Transaction Reports and Analysis Centre (AUSTRAC) have found that Australian real estate is a haven for laundered funds, particularly from China. This view is supported by other notable “experts”, as revealed by Fairfax’s Michael West recently.
The solution is simple: fix the the monitoring and enforcement around foreign investment, along with the Australia’s anti-money laundering laws, and residents’ concerns and accusations about illegal real estate purchases will disappear overnight.
In the meantime, Wayne Tseng would help his cause if his Chinese Chamber of Property Investors website actually included explicit statements informing Chinese investors that it is illegal to invest in Australian real estate without 1) Australian residency, or 2) prior FIRB approval, along with providing an overview of Australia’s foreign investment regime. Nowhere on his site can I see such disclosures.
