John McGrath has spoken out after recent media reports have indicated foreign investors are acquiring houses in Sydney and Melbourne under illegal circumstances. REINSW has addressed the media focus on foreign investors and the idea they play a “negative role” in the Australian property market as misguided.
“I am not aware of any such practices,” the McGrath Chief Executive told the Australian Financial Review earlier this month
“Chinese buyers who purchase through our agents always do so through legitimate methods. We have extended discussions with most of our clients, so we are always aware whether they are buying real estate subject to Foreign Investment Review Board approval or if they have existing residency."
Last week, Melbourne buyer’s agent David Morrell told the AFR that a large number of expensive houses in Melbourne and Sydney are being purchased illegally by non-resident Asian buyers, who pay up to 30 per cent above market rates with estate agents and lawyers eager to assist.
Mr McGrath said he strongly disagreed that Asian buyers paid a premium for property.
“Their purchases are well researched and they pay fair market value. I am not seeing any systemic evidence they are paying a premium to get into the market. If anything, Asian buyers are slightly more conservative than local buyers,” he said.
Mr McGrath also touched on the cultural side of the debate, warning of “racist overtones” creeping into the debate.
“I think from a cultural point of view, we only benefit from overseas residents wanting to invest in our country.”
Liberal MP and Chairwoman of the Parliamentary Inquiry into Foreign Investment in Real Estate Kelly O’Dwyer said the committee had heard of individuals trying to contravene FIRB rules.
“Not everyone that is a non-resident foreign investor applies to FIRB for approval. But you can’t rely on anecdotal evidence, you need to look at the facts. There are clear deficiencies in the timeliness and accuracy in the information provided on foreign investment. It’s something the committee has taken a strong interest in,” Ms O’Dwyer said.
Ms O’Dwyer said there was also clear evidence that penalties needed to be tougher and on a sliding scale tied to the value of the property purchased. An $85,000 fine is currently in place for breaking the law.
REINSW President Malcolm Gunning has said we need to stop unfairly positioning foreign investors are being as the cause of the various market issues.
“Now is not the time to discourage foreign investment. The inquiry will find that foreign investors help our economy. They support the creation of jobs in the construction industry and other areas like retail.
“Everyone benefits from a stronger property market. Now is not the time to point the finger at foreign investors, Australia needs them.
“Let’s fix the flaws in the system that created these problems, the clunky planning laws that are slow and outdated and the overtaxing of property, rather than blaming an easy target,” Mr Gunning said.