Douglas Driscoll, the CEO of Starr Partners – real estate agents – reckons that foreign buying of Australian real estate is out of control.
It is a good indication just how out of control the Sydney housing market has become when a real estate agent is concerned about excess speculative investment. While stagnant and slowing volumes in a market where many buyers are priced out is the likely explanation, he still deserves a small gold star for speaking up.
What is unclear is where he gets the number of 200,000 empty houses?
It is one thing to peak through a few windows or count unlit apartments at night, a very different thing to arrive at a number like 200,000.
While we may never know the precise number of apartments and houses that have been bought by foreign buyers and have been left “hygenically sealed for their protection” there should be no difficulty in determining the numbers of apartments and houses both new and existing that have been bought by foreign buyers since 1 July 2016.
The number can be easily verified by the Australian Tax Office (ATO) as all state land title offices have been collecting data since 1 July 2016 data on exactly who is buying what and passing that information to the ATO to compile in their national land title database. Incidentally the states delivered last year to the ATO over 32 years worth of property and rental bond records, so the ATO now have the ability to match property ownership to tax records. So if you have not been declaring rental income on long held fully owned property be afraid.
It is time for the ALP, the Greens, Jackie, Nick, Derryn and Pauline to start demanding information and action from Dud Malcolm and his team of carpet baggers who are eager to sell off Australia to foreign buyers as fast as they can.
Some states are charging stamp duty surcharges on foreign buyers – including temporary residents – so they have a keen financial interest in establishing the identity and status of buyers and they are being very rigorous – according to friends who have recently purchased.
The data is out there!
It will not be difficult for the ATO to provide the Australian Public with definitive numbers for the following:
(a) Foreign buyers of new homes and apartments since 1 July 2016.
(b) Foreign sellers of new homes and apartments since 1 July 2016.
(c) Temporary resident buyers of new homes and apartments since 1 July 2016.
(d) Temporary resident buyers of existing homes and apartments since 1 July 2016.
(e) Temporary resident sellers of new and existing homes and apartments since 1 July 2016.
Temporary residents should be immediately banned from buying existing property.
Even though they are required to divest existing property on departure that is not good enough – assuming that they are actually complying with the law.
We have an army of Aussie landlords that are keen to rent temporary residents a place to stay during their studies and time in Australia. If it is good enough for a large % of the Australian public to rent it is good enough for temporary residents to rent.
However, if a temporary resident is desperate to buy a NEW property, which in theory adds to the supply of housing, the purchase should still be subject to quotas and limits on foreign purchaes of new property.
Quotas and limits on foreign purchases of new property
The numbers of sales of new homes and apartments sold to foreign buyers (either offshore or temporary residents) in any year must be limited by the FIRB – perhaps in total and/or by location.
While new housing in theory adds to supply, construction capacity is limited and so are appropriate locations – mostly due to town planning bottle necks but they are real and cannot be ignored. If the available construction capacity is being channelled into construction for foreign buyers who then hoard the property and do not sell it into the secondary market or rent it out – there is no increase in supply to the local rental or purchase markets.
Hoarding by foreign buyers does not add to supply. Even with hundreds of construction cranes in Sydney and Melbourne rental vacancy rates remain very tight circa 2%.
Accordingly, the FIRB must limit the number of approvals to foreign buyers (offshore and temporary resident to a fraction of the expected new home and apartment completions in any year.
In addition, a special property tax on foreign owners (offshore or local) may help encourage them to rent out their hoarded holdings.
If the expected construction capacity for new housing in Sydney in 2017/2018 is X the FIRB should limit the approvals to foreign buyers (offshore and temporary resident) to buy that new housing to a % of that number. When the number of approvals has been reached foreign buyers miss out until the next quota of approvals becomes available.
When rental vacancy rates in specific metropolitan or regional areas exceed 4% and thus there is a reasonable abundance of rental supply for the Australian public then the quotas on sales of new constructing apartments and houses to foreign buyers in those markets might be relaxed and they can horde as many skyboxes or McMansions as they like.
In Perth and Darwin which have residential vacancy rates close to or exceeding 4% sales of new construction to foreign buyers is much less of an issue – though foreign interest is probably very low as well. They can smell a soft market too.
The ALP and all the other opposition parties should adopt the above policies and start demanding release of hard numbers on foreign buying (offshore and temporary resident) by the ATO and immediate action by the LNP.