The Australian government has ordered the forcible sale of 15 properties bought illegally by foreign buyers. The properties sold ranged from A$140,000 to A$5.9 million in value.
Treasurer Scott Morrison made the announcement last week, highlighting that the total number of forced property sales since May 2016 was now at 6, having a cumulative value of A$107 million. Morrison said that the government was committed to enforcing rules so that illegally held Australian properties are identified.
The government has been under increasing pressure to show that the country’s foreign ownership rules are being adhered to amid rising concerns that foreign buyers are fueling Australia’s housing boom. According to data from the Australian Bureau of Statistics, housing prices in the nation’s major cities has climbed by nearly 50 percent since the year 2008.
Housing prices in Sydney, the largest city in Australia has almost doubled since 2009, resulting in it becoming the world’s second most unaffordable city after Hong Kong, as per a report from researcher Demographia. In an attempt to crackdown on violations, the government has increased scrutiny of transactions as well as enforcement of existing regulations.
Current foreign ownership rules require buyers to apply to the government's Foreign Investment Review Board before buying property in the country. Non-Australians can buy only newly-built property, and not pre-existing units. The 15 recently-sold properties had been owned by citizens of India, China, Iran, Indonesia, Britain, Germany and Malaysia. Suspect transactions are typically identified via tips from public or data analysis. The biggest forced sale was that of a A$5.9 million property owned by an Indian national and located in Rockbank, a suburb located in the outskirts of Melbourne. Industry observers point out that government action has been taken on very few cases.
In a statement Charles Pittar chief executive of Chinese property website Juwai.com said,
The Foreign Investment Review Board has approved A$343 billion property purchases since 2010, and in total only A$140 million of investments have had to be divested. Divestments are equivalent to about four hundredths of 1 per cent of the total value of approved investments. Meanwhile, the Australian Tax Office has estimated that 5 per cent of wealthy Australians attempt to evade paying their taxes.
Pittar noted that out of the over 2000 investigations made into suspected illegal purchases, only 61 resulted in forced sales. Additionally just 3 percent of cases investigated found wrong doing resulting in divestment. The Australian government has also blocked foreign buyer bids for infrastructure assets such as the A$16.2 billion electricity Ausgrid, citing national security concerns.