After Federal Treasurer Joe Hockey announced tougher foreign investment sanctions, Chinese home buyers have become more cautious with their Australia real estate investments.
Chinese investors, one of the largest group of foreign investors in the country, as stated in Australia's Financial Review (AFR), are more careful now in snapping up properties. According to Asian real estate agent House 18's Michael Zhu, the Chinese have become more curious of the foreign investment rules. He added, "The rules have always been there. In the past, there were fewer Chinese investors and so the control of investments were not as tight. Now people especially the smaller investors are very worried."
The AFR report also mentioned the influx of calls that the Australian Tax Office call center has received over the last weeks. A Treasury spokeswoman said that the office has seen the greatest volume of inquiries since it took responsibility for the Foreign Investment Review Board (FIRB) "report a breach" hotline in May. The spokesperson shared, "There has been a gradual increase in the volume of calls received in the last four weeks. The average number of community referrals is between 100 to 200 per month."
Esther Yong, director of the Australia-based Chinese property website ACproperty, also told AFR that the company has experienced a 40 percent increase in inquiries from buyers who are looking to learn more about Australia's foreign investment rules. Yong explained that that Chinese buyers are "looking to buy" but reportedly are holding back until they get a clear understanding of the country's investment reforms. The ACproperty executive added that the government's recent crackdown on policy breaches have "definitely raised awareness among Chinese buyers."
Meanwhile, the new reforms were introduced to parliament by Hockey Thursday last week which aimed to "ensure that continued foreign investment in Australia will benefit all Australians," reports the Daily Telegraph. The policy revisions included an increase in penalties from $90,000 to $135,000. The foreign investment reforms also stated that agents, realtors, lawyers or third parties found knowingly helping foreign investors to break the rules will also be subject to civil and criminal penalties.
In the report, the Daily Telegraph also compiled some of the key changes proposed by Hockey. One of which required foreign investors to pay $5,000 for applications to buy residential and agricultural properties valued under $1 million. Aside the increase penalties, companies found to have breached the rules will also be fined with $675,000.
