Foreign real estate changes a decoy; expert
The move to introduce new fees and greater scrutiny of foreign real-estate investors is a decoy drawing attention away from Australia's unfettered commitment to offshore investment, according to an urban researcher from the University of Western Sydney.
The federal government has announced new fees(opens in a new window) of at least $5,000 for foreign buyers of Australian real-estate, and a new register to track offshore owners of residential and agricultural property.
Dallas Rogers from the UWS Urban Research Centre has investigated Chinese investment by studying sales data and interviewing international real estate agents, finding Australian real estate is driven by financial, immigration and real estate agents rather than the investors themselves.
He says the changes are welcome, but ignore the rationale underpinning the 2014 parliamentary inquiry into individual foreign investment in residential real estate.
"Contrary to popular opinion, foreign investment in real-estate is designed to increase the supply of housing in Australian cities, as they are only able to purchase new dwellings," says Dr Rogers.
"The recent parliamentary inquiry found foreign real-estate investment is achieving this aim, but it failed to examine how to leverage offshore investment to produce more benefits for Australians, either through home ownership or more affordable housing".
"In the same way, focusing on the identity and actions of investors diverts attention from the real challenge - how to regulate foreign capital to achieve better housing outcomes for Australians."
Dr Rogers says the discussion should focus on the Australian government's regulatory frameworks and the unfettered commitment to foreign capital.
"These changes are welcome, as it goes without saying that we need to know who, when and where foreign investors are investing and how the money is changing hands," he says.
"But it's more important to know if the government's regulatory frameworks for foreign investment, such as the visa rules and taxation policies, are leading to more affordable housing stock in Australian cities."
"The Australian government regulates foreign investment in real estate assets, and they are responsible for making sure the housing benefits flow through to the Australian population. We need to make sure that happens."
25 February 2015
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