Sydney now an international Global City, like New York and London. Young people will have to rent.; A tiny one-bedroom flat within 6.5km of central London costs the equivalent of more than $1 million
Tweet Topic Started: 20 Jun 2015, 05:39 PM (5,364 Views)
Overseas investment in housing throughout Australia will not slow down due to new Federal and State government rules imposing greater cost on foreign property transactions, a key research firm says.
BIS Shrapnel likened moves on the part of the Federal and Victorian governments to introduce application fees for foreign buyers and beef up regulation and penalties for breaches in the case of the former and impose extra charges on for land tax in the case of the latter to ‘throwing pennies in the path of a steamroller.' The firm said foreign investment in Australian residential property would continue to increase irrespective of the measures.
“In the medium term the upwards trajectory of investment will continue as China’s affluent middle class continues to grow and Australia continues to be seen as a safe haven for investment,” BIS researcher Maree Kilroy said.
“The trends supporting foreign demand therefore remain solid looking ahead, and we expect that foreign investment in housing will continue to increase. These latest measures by government would seem like little more than throwing pennies in the path of a steamroller.”
In response to concerns foreigners are crowding out first home buyers within the Australian property market and failing to comply with local rules, governments at a federal and state level have been under pressure to act.
At a Federal level, from December 1, all non-residents who purchase residential property will be subject to an application fee of $5,000 for properties valued up to $1 million and an extra $10,000 for each $1 million thereafter, while developers will need to pay $25,000 for off-the-plan scheme approvals.
Breaches for foreign investment rules will attract prison sentences of up to three years or fines of $127,500 for individuals and $637,500 for companies, while third parties who knowingly assist in the purchase of illegally attained properties face penalties of up to $42,500 and $212,500 for individuals and companies respectively.
At a state level, Victoria has imposed a three per cent land duty surcharge upon foreigners who do not hold permanent Australian residency and will impose an additional 0.5 per cent land tax from 2016 onward on new and existing properties.
The moves are in response to fears about the flouting of compliance with foreign investment rules, which generally prohibit the purchase of existing property (as opposed to new or newly built property) from non-residents apart from purchases which are made for the purpose of their own personal use while staying in Australia.
South Australia has signalled it may follow Victoria’s lead, though Queensland has indicated that it will not.
According to the Federal Government, the new fees will be used to beef up regulator efforts and resources to enforce compliance.
It says investigations are underway into almost 200 cases in which the rules may have been breached.
Pointing to the latest Foreign Investment Board Review data, however – which shows a more than doubling of approved purchases of new and existing residential real-estate over the past four years – BIS suggests momentum especially from Chinese investors, who accounted for half of the foreign purchases in local real estate last year, was sent to continue.
Indeed, it says a 20 to 25 per cent drop in value of the the Australian dollar against the Chinese renminbi over the past year has more than offset any rise in costs associated with the fees.
“Consider this: the depreciation of the $A over the past 12 months more than compensates potential foreign investors for the new government fees, by making Australian properties cheaper in foreign currency terms,” Kilroy said.
“The $A has dropped 20 to 25 per cent against the Chinese renminbi. So if you’re buying a $500,000 dwelling you are already $100,000 plus better off anyway.”
I don't think it's a bubble. I saw one of those in Hong Kong in 1996 when taxi drivers had 3 or 4 flats, and you could get a mortgage by hiding your loans from different banks by changing bank accounts - or putting your salary through your granny's current account for three months to make it look as if you were debt free (not me by the way). Also, in the US in 2008 where you could get a mortgage with no income and no downpayment. Now all the banks talk to each other.
I think this is more a case of Sydney catching up with the rest of the world as it takes its place alongside London, New York, Tokyo, HK, and Singapore.
At the moment, Australia is the nearest thing to a Free China, and the A$ is the nearest thing to a floating Chinese currency - as Australia has everything China wants (resources, food, rule of law, English-speaking, and opportunity).
Mainland Chinese and HK people are cashed after years of saving (HK went through a brutal decade after 1997) and prices are now much cheaper as the A$ has fallen by about 25% against the HK$ and the renminbi. However, this money can only be put to work in the primary housing market because of the FIRB - unless buyers have residence.
Having said that, it's risky to buy outside core Sydney in my view, unless you are cashed up or have a genuine link to that area.
Oh, and please don't blame the Chinese. I'm a Brit without a residency visa, and I bought in Wolli Creek, the Pearl of the South, because Hong Kong is becoming politically unstable, and there are inheritance tax issues for me in the UK.
I don't think it's a bubble. I saw one of those in Hong Kong in 1996 when taxi drivers had 3 or 4 flats, and you could get a mortgage by hiding your loans from different banks by changing bank accounts - or putting your salary through your granny's current account for three months to make it look as if you were debt free (not me by the way). Also, in the US in 2008 where you could get a mortgage with no income and no downpayment. Now all the banks talk to each other.
I think this is more a case of Sydney catching up with the rest of the world as it takes its place alongside London, New York, Tokyo, HK, and Singapore.
At the moment, Australia is the nearest thing to a Free China, and the A$ is the nearest thing to a floating Chinese currency - as Australia has everything China wants (resources, food, rule of law, English-speaking, and opportunity).
Mainland Chinese and HK people are cashed after years of saving (HK went through a brutal decade after 1997) and prices are now much cheaper as the A$ has fallen by about 25% against the HK$ and the renminbi. However, this money can only be put to work in the primary housing market because of the FIRB - unless buyers have residence.
Having said that, it's risky to buy outside core Sydney in my view, unless you are cashed up or have a genuine link to that area.
Oh, and please don't blame the Chinese. I'm a Brit without a residency visa, and I bought in Wolli Creek, the Pearl of the South, because Hong Kong is becoming politically unstable, and there are inheritance tax issues for me in the UK.
We have become the little haven for dirty money, and scum fleeing their obligations.
Welcome dude!
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
Once upon a time in Yee Olde London Towne an individual blacksmith, a carpenter and the like cloud afford to live, own and or rent their business premise within the square mile of the city. Now most of them cannot.
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