Another day, another report on the huge surge of foreign investment in Australian property, this time from The Australian:
In the first nine months of this financial year, sales to foreigners are almost double the total from the whole of last year and represent a record 13 per cent of the total value of property sold. In Victoria, purchases by foreigners made up a massive 23.2 per cent — almost a quarter of the total value of property sold in the state over this period. The data — extracted from Treasury figures and supplied to a parliamentary inquiry by RP Data — undermines claims that foreign investment is an insignificant share of demand.
Surely this evidence from RP Data debunks, once and for all, the notion that foreign purchasers of Australian property are an insignificant share of demand and are not working to price locals out of the market. It also accords with the latest NAB property survey, which found that foreigners accounted for nearly 10% of demand for pre-existing dwellings in Australia (see next chart).
When viewed in light of recent reports from the Australian Bureau of Statistics, real estate agents, industry professionals, and UBS investment bank, it is clear as day that the official Foreign Investment Review Board (FIRB) data on foreign property investment is inaccurate.
Further, when combined with the fact that 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, then there can be no doubt that the regulatory regime governing foreign investment in property is broken and fundamental reform is desperately required in order to restore faith and integrity to the system.
Thankfully, the chair of the House of Representatives Inquiry into foreign property investment, Kelly O’Dwyer, appears to have taken these concerns on board, yesterday flagging that the inquiry report would recommend “new application fees, tighter enforcement of the prohibition on acquiring fixed homes and possibly extra stamp duty for foreign investors”.
This is a wise move, as foreign investment into Australian property, and housing affordability more generally, is fast becoming a hot political issue.
Young Australians also 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.
- Labor flags first home buyer subsidies for next election - August 2, 2021
- Boarding houses the latest housing affordability gimmick - August 2, 2021
- Aussie rents grow fastest since GFC - August 2, 2021