FEARS that Chinese investors are pricing first-home buyers out of the market as they plunge $6 billion into Australian real estate will be investigated by parliament.
As the rise of China’s cashed-up middle class creates new opportunities for Australian developers, Coalition MPs have raised concerns that young families are being locked out of owning their own homes.
Treasurer Joe Hockey will now ask the House of Representatives Economics Committee to examine whether foreign investment in real estate is being properly policed.
The federal inquiry follows a recent report by Credit Suisse that estimates Chinese investors are snapping up 18 per cent of all new apartments and houses in Sydney and 14 per cent in Melbourne. In Brisbane, an estimated 7 per cent of new apartments are bought by Chinese investors. The figures do not include existing homes bought by foreigners.
The report predicted the growing overseas demand was good news for local building suppliers, construction jobs and developers but was also likely to drive property prices higher.
Chaired by Victorian MP Kelly O’Dwyer, the parliamentary inquiry will hold public hearings in real estate hot spots including Sydney and Melbourne.
“We need more homes, so foreign investment that increases the number of homes available is a good thing, particularly where it is housing for first-home buyers,’’ she said.
“That is the objective of current policy, but we need to examine what is happening on the ground.
“The great Australian dream to own your own home is hard enough to achieve on two incomes, with years of savings and a large mortgage.
“We need to make sure that we aren’t making it more difficult — which is why we are going to examine the facts in our inquiry.’’
But there are concerns the Foreign Investment Review Board lacks the manpower to police the rules, with the latest data suggesting investment in existing properties by foreign investors is growing. There are also concerns that rules requiring temporary residents to sell Australian properties when they leave are not being policed.
The terms of reference for the inquiry will ask the committee to investigate whether the current rules are adequate and if existing laws are being enforced.
MEET THE AGENTS BRINGING CHINESE HOMEBUYERS TO SYDNEY
IN the heart of Shanghai’s bustling central shopping district a Chinese man incongruously dressed as a giant kangaroo is handing out property prospectuses in Mandarin to the thousands of people pouring into the Shanghai Exhibition Centre.
For many at the three-day Shanghai Property and Investment Immigration Show, Sydney is top of their list — anything from a one-bedroom apartment to a multimillion-dollar freestanding house. These are the same cashed-up homebuyers being targeted by the Sydney Luxury Property agency, whose website was set up in December for rich Chinese residents who want the most extravagant homes available.
The website is run by Simeon Manners Property in Sydney, which provides a “10-star service” with airport-to-airport transport for Chinese businessmen on a whirlwind property tour. In most cases their families live locally while the husband commutes from China.
Top property industry sources say the key drivers behind the booming interest in Sydney property include restrictions and taxes on real estate investment back home, the exchange rate and Australia’s political stability.
In Beijing, investors must have a 70 per cent deposit before buying and capital gains tax on non-family homes is up to 20 per cent. In Shanghai, banks will not lend for third investment properties.
So wealthy Chinese families see Australian property as a safe and profitable way of investing cash, a source said.
1 $5.9 billion by Chinese ($4.2 billion last year)
MOST POPULAR COUNTRIES
Once a month, up to five Chinese buyers will be whisked around the lower north shore and other expensive suburbs in Simeon Manners Property’s Chrysler Voyager. They visit as many as seven unlisted properties worth up to $20 million.
The agents also take them to see schools, luxury car and boat dealers. Translators are provided if clients fail to bring their own.
The success of their agency has seen more than $100 million of sales through Chinese buyers in the past 18 months, they claim.
“When you are dealing with these people you are getting introduced to their network, the more you are in the network the more they refer you,” Richard Simeon, SLP co-founder said.
“Some of the clients are worth up to $10 billion.
Mr Simeon and Mark Manners set up SLP last year after visiting the Shanghai Luxury Property Show on December 6. Shortly after the visit they opened an office in Shanghai and launched the website.
Mr Manners said the most recent property they sold to a Chinese family was less than two weeks ago in Mosman, which went for more than $7 million.
“There has been press that Chinese are buying up all these homes and first-home buyers are being shut-out,” Mr Manners said. “But the people we are dealing with are buying multi-million- dollar property.”
Back in Shanghai, organisers hope to sell 20 to 30 properties over the weekend as 100,000 people trudge the vast exhibition halls.