Do we tell foreign buyers to buy or bye?

Do we tell foreign buyers to buy or bye?


When the Budget was released this week I kept reading with great interest that the government had failed to address ‘housing affordability’. Truth be known the only thing that the Abbott government actually controls is foreign buyers and taxation such as negative gearing and capital gains tax. With regard to foreign buyers it has been well documented that with regard to this portfolio they have Failed it with a capital ‘F’.

In fairness the Federal government would respond by saying that to the contrary they have already unleashed the Australian Taxation Office (ATO) to forensically investigate all property transactions that they believe have contravened the laws. Well if it wasn’t for some bloggers and journalists who pointed this out to the Abbott government foreign buyers would be still running amok. I believe the findings will leave most property observers gobsmacked because I believe we are talking about thousands and thousands of sales.

It’s interesting to note that last week a Senate committee made 40 something recommendations pertaining to housing affordability which included calls to review negative gearing and the appointment of a federal minister for housing, to name just two. Well I have been vocal on not having a housing minister since the Abbott government came to office. More interesting was that Coalition senators immediately rejected the findings – well no surprises there.

Carnival-Spirit-SydneyAerialPhotography

SYDNEY AERIAL PHOTOGRAPHY

If you look closely at the housing affordability debate it can be quickly summed up that data shows we are not building enough high density developments. I wrote about this recently – Lots of positives from discussing negative policies where the NSW government has recognised the problem stemming from municipal councils who are rejecting developments despite the Sydney population expanding at unprecedented levels. The NSW government wants to merge councils to free up more development to meet Sydney’s population explosion.

Should the NSW government be successful with its charter then the price of apartments will obviously come down as too rents. So I’m somewhat mystified why property investors are driving up apartment prices when such a major announcement is pending.

The Abbott government needs to take a very serious look at the legislation that allows foreign buyers to purchase off the plan. I believe that it would be sage for the Abbott government to place foreign buyers on – hold until the ATO has released its preliminary findings. What we are seeing today is Chinese developers out bidding the local developers simply because the off – the – plan legislation allows them to sell directly overseas to foreign buyers so these properties never even hit the Australian market. A vast number of these properties are land banked so they remain vacant which again is self-defeating and ludicrous that this can happen in this day and age.

This week we also read that there are foreign criminals trying to buy Australian real estate to wash their money by investing in real estate. Well this is nothing new as I have heard a few examples of agents who questioned some foreign buyers who expressed interest in landmark Sydney residences.

Thailand has had serious problems with the Russian mafia who have bought up significant parts of that country where the government announced a few years ago that it was cracking down hard on these transactions. This is a global problem where Australia immediately needs to take decisive action which also means tightening the many legal loopholes.

Take the recent divestment order on Villa del Mare where it was found that the Chinese purchaser did not have Australian residence. When I wrote about this Treasurer Joe’s Villa del Nightmare on March 5 I said that the purchaser would find an Australian resident to buy the property. Well Australian buyer Lola Li emerges with Villa del Mare, the $39 million Point Piper FIRB home.

The good news to come from this debate is that for the first time “the dogs are barking” and the Abbott government has to act – and act fast. Finding a viable solution to foreign buyers will prove a much harder assignment than towing back boats.

With regard to new developments, for starters there should be a selling ratio of foreign buyers to Australian residents established.

The Australian property industry has never before encountered such a debate and much of this stems from record low global cash rates. Investors are chasing returns and Sydney is one of the hottest property markets on the globe.

The Abbott government needs to send a very clear message to foreign buyers which is either buy or bye?

Mosman Market

When you look closely at the actual numbers of properties on the market you will struggle to say that the market is booming or bubbling as some prefer to say. Historically when markets are booming this coincides with record volumes being on the market which is otherwise known as a feeding frenzy. The confusing parts about our local markets are that stock levels are down 50 per cent on this time last year or thereabouts.

MOSMAN – 2088

• Number of houses on the market this time last year – 102

• Number of houses on the market last week – 57

• Number of houses on the market this week – 57

• Number of apartments on the market this time last year – 72

• Number of apartments on the market last week – 50

• Number of apartments on the market this week – 49

CREMORNE – 2090

• Number of houses on the market this time last year – 7

• Number of houses on the market last week – 3

• Number of houses on the market this week – 4

• Number of apartments on the market this time last year – 27

• Number of apartments on the market last week – 13

• Number of apartments on the market this week – 10

NEUTRAL BAY – 2089

• Number of houses on the market this time last year – 7

• Number of houses on the market last week – 3

•Number of houses on the market this week – 3

• Number of apartments on the market this time last year– 48

• Number of apartments on the market last week – 31

• Number of apartments on the market this week – 27

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

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For this week’s open for inspections

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Source: APM Price Finder

One Response to “Do we tell foreign buyers to buy or bye?”

  • Ann says:

    Definitely BYE. The scale of it at the moment is causing too many issues in terms of scale, density, cost and standard of living.

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