Quandary of for­eign buy­ers

Herald Sun - Property - - OPINION - AN­DREW WIN­TER An­drew Win­ter hosts Selling Houses Aus­tralia on the Lifestyle Chan­nel

FOR­EIGN residential prop­erty own­er­ship has hit the head­lines yet again.

This is noth­ing new and usu­ally her­alds peo­ple look­ing to lay blame in a boom­ing mar­ket.

We love to blame, surely it has to be some­one’s fault and cashed up over­seas buy­ers seem to be as good a place to start as any. Or are they?

Be­fore we ap­por­tion blame, I think we need to clar­ify ex­actly who are “for­eign buy­ers”.

This should be rather easy be­cause we have the nice chaps at the For­eign In­vest­ment Re­view Board — we’ll call them FIRB for short. They have rules that re­late to how we, as a na­tion, con­sider and per­mit non-cit­i­zens, non­res­i­dents, tem­po­rary res­i­dents, hol­i­day­ing types and busi­nesses to pur­chase and own dwellings.

Firstly, do we re­ally need to con­trol at all, what is sup­pos­edly, a free mar­ket?

Per­son­ally, I think we do. Aus­tralia has an en­vi­able es­tab­lished hous­ing mar­ket, de­spite our pop­u­la­tion and ge­og­ra­phy.

Our ti­tle reg­is­tra­tion, le­gal pro­cesses, de­fined prop­erty bound­aries and long-term cap­i­tal growth history, along with the strong rental mar­ket, are all signs of a grown up real es­tate mar­ket.

Nu­mer­ous other na­tions sim­ply don’t have such sys­tems in place or have the econ­omy or cur­rency which dis­plays the air of as­sur­ance or low risk that has us viewed as a safe haven.

Or per­haps their own hous­ing mar­ket is within the emerg­ing cat­e­gory, where the pri­vate hous­ing sec­tor is still in its in­fancy.

With­out any con­trols what­so­ever, it re­ally could cause the gen­eral hous­ing mar­ket some se­ri­ous is­sues.

Typ­i­cally, an over­seas buyer rep­re­sents the more wealthy de­mo­graphic, which can in­crease de­mand to a point where prices get squeezed up un­sus­tain­ably.

How­ever, we don’t need to ban the prac­tice which leads to the most rel­e­vant topic — if we do need to con­trol for­eign in­vest­ment, how can we do it and in what way?

As I’m writ­ing this I re­alise I’m en­ter­ing po­ten­tially dan­ger­ous ter­ri­tory.

This could be fol­lowed by a visit from yours truly to your sub­urb, pos­si­bly by he­li­copter, then wan­der­ing the streets, kiss­ing your ba­bies and hang­ing gi­ant posters of my­self at prom­i­nent street lo­ca­tions. To avoid this I will tread wisely.

We al­ready have con­trols such as the “buy new” rule, plus per­mis­sion and ap­proval re­quired for new res­i­dents, visi­tors or hol­i­day-mak­ers to make a pur­chase.

It does seem how­ever, in light of re­cent news re­ports of mul­ti­ple pur­chases, homes ly­ing va­cant for years and oth­ers pos­si­bly be­ing used as noth­ing more than ve­hi­cles for money laun­der­ing, that even if the con­trols are there, they aren’t be­ing mon­i­tored fully.

I have per­sonal ex­pe­ri­ence of this. As new mi­grants 10 years ago and then only clas­si­fied as tem­po­rary res­i­dents, we were told that our visa would only per­mit pur­chas­ing brand new hous­ing stock. Yet af­ter a few months of re­search I dis­cov­ered that a po­lite let­ter to FIRB would lit­er­ally re­lax the rule.

We do need con­trols that are both fair and strictly ad­hered to.

I also be­lieve we shouldn’t ac­cept any abuse of the sys­tem and en­sure that if an over­seas buyer wants to en­ter our hous­ing mar­ket for noth­ing more than fi­nan­cial gain, taxes should be im­ple­mented.

We should also en­sure com­pa­nies aren’t al­lowed to con­ve­niently by­pass any leg­is­la­tion set down and that cor­po­rate re­quests are re­viewed thor­oughly.

This should all be about a bal­ance.

Al­low any­one to em­brace our hous­ing mar­ket, al­low in­vest­ment and ac­qui­si­tions from any na­tion­al­ity, but have strict, fair con­trol, taxes where ap­pli­ca­ble, plus the abil­ity to mon­i­tor the sys­tem for any breach or abuse.

Many other coun­tries have the same co­nun­drum.

An area of cen­tral Lon­don I per­son­ally know very well, af­ter be­ing an agent there for many years, is boom­ing right now.

One devel­oper re­leased a new high-rise, high-pro­file apart­ment scheme.

At the point of re­lease more than half the sales were to over­seas buy­ers. Of the 230 units re­leased, 208 were sold in the first few hours.

Prices for a mod­est 52sq m apart­ment started at $1.3m.

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