More evidence has emerged that the data surrounding foreign purchases of Australian property is highly unreliable, with the Australian Bureau of Statistics (ABS) admitting to the House of Representatives inquiry that it relies on trade magazines and newspapers to keep track of foreign activity in Australian real estate, whilst also admitting that its estimates of foreign investment is “very conservative”. From the Canberra Times:
”We do scan press reports and real estate specialist magazines to try to identify purchases of real estate, and [to] record those and record valuation changes from those. But I have to say, that’s a bit hit and miss,” [ABS assistant statistician, Paul] Mahoney said…
Committee chair and Liberal MP Kelly O’Dwyer asked Mr Mahoney if the actual figure of foreign investment in Australia’s residential real estate could be higher than the ABS believed.
”[That] would be a fair statement,” Mr Mahoney said.
Certainly, the accumulating evidence from real estate agents, industry professionals and others raise big doubts over whether the reported number of existing homes sold to foreigners is anywhere near accurate, with the true figure likely much higher (see below table from FIRB).
Versus the NAB’s Residential Property Survey of industry insiders:
Moreover, when combined with the fact that the Foreign Investment Review Board (FIRB) has, since 2010, failed to prosecute any foreign buyer for breaching the foreign ownership rules, and the admission by FIRB that it is incapable of monitoring/enforcing whether a foreign temporary resident has sold their home within three months of departing Australia, it is clear that the regulatory regime governing foreign investment in Australian real estate is not working.
As I have said previously, young Australians have a right to expect the government to implement measures to make housing more accessible by increasing supply, as well as clamping down on excess demand, whether from foreigners or local tax-advantaged speculators.
Let’s hope the Parliamentary Inquiry actually fulfills its role and recommends meaningful reforms to the foreign investment regulatory system.