By Malcolm Gunning - REINSW President
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The recent announcement by Prime Minister Tony Abbott regarding the taxation of foreign investment is simply bravado and grandstanding.
The measures propose that foreign investors will pay $5000 for the first million dollars. The fee rises by a further $10,000 for every extra million.
REINSW believes this sends the wrong message to investors. Furthermore, it does not address the crux of the problem.
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It’s important to note that the majority of foreign investors, in particular Asian investors, are very risk-averse. They don’t like breaching the law, particularly in the country they’re coming into.
The real issue with the foreign investment market lies not in the large waterfront mansions, but rather the trading that is taking place at the lower end of the market.
We’ve been pressing NSW Fair Trading to look closely at what is going on at this end of the market, particularly among agents with little education and training, who are transacting properties yet have no idea about the regulations surrounding the FIRB requirements. These agents are openly promoting sales within the Asian community.
NSW Fair Trading has chosen to ignore this call by REINSW. Instead, they have gone out on a blitz against the high-profile areas and have been heavily promoting this in the media.
Rather than dealing with the issue at the core, where unconsciously incompetent agents are profiteering out of the interest of overseas buyers, the State and Federal Governments are making a display of the high-end market. Because this sells stories.
Government is missing the point.
There is no real understanding of the laws and regulations. Agents with very little training and education are openly promoting that they won’t get caught while the government is focusing on the high-end market.
All the Government is really doing is reacting to public outcry about foreign investors pushing up prices. Yet, the data proves this to be incorrect.