Bloomberg’s Narayanan Somasundaram has penned an article examining Chinese-Australians’ widespread use of foreign money to purchase Australian homes, which is supporting house values, particularly in Sydney and Melbourne:
Han is among scores of buyers who with the backing of relatives in China are underpinning a housing market in Australia that’s coming off the boil. More than half the buyers of Chinese origin are supported financially by relatives residing in the world’s second-largest economy, according to McGrath Ltd., Australia’s only listed real estate agency. The firm’s China desk has assisted in sales worth A$140 million since it was established in September 2013…
Five out of the seven properties sold earlier this year by First National Real Estate in Lindfield — a suburb about 13 kilometers north of Sydney’s business district — were to buyers of Chinese origin, according to Lan Zhang, a director at the firm.
“Chinese origin buyers who are either permanent residents or citizens are among the biggest group of people who visit our open homes,” she said. The buyers were able to exchange contracts within a few days of agreeing on a deal, suggesting financing was not an issue, she said…
Demand in Australia is so strong that online real estate listing firm Domain Group has since late 2013 published a glossy weekly in Chinese, which it distributes at 400 points across Sydney and Melbourne. The site is looking at more ways to connect with Chinese Australians as it expects demand from the community to only increase…
My “off-the-record” discussions with real estate agents suggests that Chinese demand is still running strong, particularly in Melbourne’s east (where I live). However, whether these are mostly legal sales to Chinese residents using foreign money, or illegal sales to non-residents, is unknown.
Anecdotally at least, there have been multiple auction sales (often via translator) to Chinese buyers over the past year in my suburb, with some of those homes now left empty and becoming derelict.
Moreover, a reader of MB with whom I have had discussions with has attempted on several occasions (via FOI) to chase-up results of investigations pertaining to illegal sales lodged with FIRB/ATO, only to be denied access on confidentiality grounds.
So basically we have no way of knowing whether the ATO’s enforcement activities pertaining to illegal property sales to foreigners are working.
It’s time for a detailed update, Scott Morrison.