A crackdown on illegal investment in real estate has broadened, with almost 500 properties worth more than $1 billion in total under investigation and more foreign buyers forced to sell properties.
The government has been under pressure to rein in an investment-driven surge in home prices in Sydney and Melbourne, amid growing criticism that wealthy Asian buyers are making the property market increasingly unaffordable.
Treasurer Joe Hockey said divestment orders have been served on five properties across the country, forcing their owners -- who hail from Singapore, Indonesia, the UK and China -- to sell homes. He added that the crackdown is continuing despite political turmoil this week that saw Malcolm Turnbull replace Tony Abbott as prime minister.
“The purchase prices of the properties range in value from $265,000 to $8.1 million,” Mr Hockey told reporters in Canberra. “The foreign investors involved either purchased established property without Foreign Investment Review Board approval, or had approval but their circumstances changed, meaning they were breaking the rules,” he said.
Many Australians fear cashed-up foreign investors could put homeownership out of reach of much of the population. Mr Hockey told The Wall Street Journal last month that equity-market turmoil in China could drive even more Chinese buyers to seek havens by investing in Australian property.
China last year overtook the US as Australia’s largest source of investment from overseas, with a total of $27.6bn last year, according to FIRB, the foreign-investment watchdog. Real estate accounted for almost half of that.
The latest divestment orders bring the number of properties hit by the crackdown to 12. In March, Mr Hockey ordered a Hong Kong-based buyer of $39m Sydney mansion Villa del Mare to sell after investigators said it was purchased illegally.
This time, the properties netted by the crackdown are scattered across the country and include homes in the cities of Perth, Sydney, Adelaide, Brisbane as well as the Gold Coast.
Mr. Hockey said all five owners had voluntarily come forward to detail their investments, meaning they would have a year to sell their homes rather than the usual three months, under an amnesty offer announced by the government in May.
The Reserve Bank of Australia has warned the nation’s property boom is unbalanced and potentially dangerous to a fragile economy, as economists become increasingly nervous about the possibility of the country entering a recession for the first time in 24 years.
Australia’s economy grew by 0.2 per cent in the second quarter from the first three months of the year and 2 per cent from a year earlier, its slowest quarterly growth in four years in the second quarter.
The Reserve Bank of Australia is forecasting 2.25 per cent growth for the year, but a dip below 2 per cent could put the prospect of an interest-rate cut back on the table.