Just when you thought the Australian housing policy circus couldn’t get any more bizarre, the Daily Telegraph has reported that foreign buyers of newly constructed homes in New South Wales have been receiving the $5,000 New Home Grant:
As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.
…under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.
They don’t have to live in it. All they have to do is apply through the foreign investment review board to buy.
In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird’s office confirmed yesterday…
LJ Hooker’s national head of home loans, Paul O’Regan, said the investment from Chinese and other Asian buyers in off-the-plan apartments was “significant”.
“We have actually run some trade shows over in China and we had 14 or 15 properties sold just at the trade show,” he said.
So while local first-time buyers struggle to get a foothold in the New South Wales housing market, shut-out by investors (see next chart), the state government is giving taxpayer funds to overseas investors.
As Catherine Cashmore has documented consistently, the types of supply being built for foreigners is not the kind that locals want and need. It would be so more efficient and equitable to liberalise the supply-side in land, put the tax-payer dollars into infrastructure provision, and let the market determine the nature and magnitude of the construction response.