Concerns about the impact of foreign investment on Australia’s property market will be addressed by a federal government inquiry.
On March 19, the House Economics Committee announced the terms of reference for an inquiry into foreign residential property investment and the policy governing it.
Committee chair, Liberal MP Kelly O’Dwyer MP, said that the existing policy was intended to channel foreign investment to boost the supply of new housing stock. This, in turn, was meant to create both economic and social benefits.
Foreign investors are limited to buying off-the-plan or newly built properties and can’t generally buy established properties for investment purposes.
However, O’Dwyer said the wider community has raised concerns that foreign investment is causing a distortion in the market and making housing less accessible and affordable.
Much of the speculation has been trained on Chinese investors, as YIP reported recently [http://www.yourinvestmentpropertymag.com.au/news/opinions-mixed-as-foreign-investment-comes-under-review-185513.aspx
], but O’Dwyer said the inquiry would not focus on investors from any particular country.
“The committee will take a very broad and holistic approach to examining whether the current policy settings are delivering the best possible outcomes for Australia.”
The Committee has been charged with investigating:
- the economic benefits of foreign investment in residential property;
- whether foreign investment is increasing the supply of new housing and benefitting the local building industry and its suppliers;
- how Australia's foreign investment framework compares internationally;
- whether there is scope to improve the administration of foreign investment policy in relation to residential property.
Submissions to the inquiry are due by 9 May 2014, and the Committee has to produce its report by 10 October 2014.
Meanwhile, dissenting opinions have been voiced in response to the inquiry announcement.
Dr Stephen Kirchner, from the Centre for Independent Studies, said that it is shoddy tax laws, not foreign investors, which are driving up the prices of new dwellings.
While Australia China Business Council president Duncan Calder said the impact of Chinese property buyers has been overstated and that there are significant benefits from their investment.
This argument is supported by a newly released Colliers International research paper. It concluded that Asian investment in Australian property has been a key factor in the improvement of the domestic retail sector.
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