By Leith van Onselen

NAB has today released its September quarter Australian Residential Property Survey, which revealed that foreign buyers continue to hoover-up established homes, with their share of established home sales stuck at around 10% nationally over the quarter, with foreigners accounting for a particularly large share of sales in Victoria:

Despite stricter restrictions on foreign investment in the established residential property market, our survey continues to suggest that foreign buyers also play a fairly significant role in this part of the market. According to surveyed property professionals in Q3, foreign buyers accounted for 11.3% of all established apartment sales (11.4% in Q2) and 9.5% of established house sales (9.4% in Q2). Foreign buyers also continue to play a far bigger role in established property markets in VIC…

One wonders how long this farce can continue. For the most part, Australia’s foreign investment rules exclude non-residents from purchasing established dwellings. And yet, overseas buyers continue to make up a large share of sales, especially in the key bubble markets of Melbourne and Sydney (coincidence?).

The Paris-based Financial Action Task Force (FATF) on money laundering has already warned that Australian residential property is a haven for international money laundering, particularly from China. As has the Australian Transaction Reports and Analysis Centre (AUSTRAC), which warned that “laundering of illicit funds through real estate is an established money laundering method in Australia”.

Viewed in this light, it beggars belief that Australia’s governments can launch thousands of prosecutions and fines against unauthorised Uber-X drivers, whilst effectively turning a blind eye to the many illegal sales of existing homes to non-residents, some of whom are from corrupt sources.

With the Government’s enhanced rules on foreign investment scheduled to come into effect from 1 December 2015, all we can do is hope that the threat of prosecutions and penalties puts an end to established homes being willingly sold-off to foreigners, at the expense of our young.

On a brighter note, foreign buyers have increased their share of new property sales, especially in Victoria, which is at least adding to supply:

By property type, survey estimates suggest that foreign buyers accounted for 19% of all new apartment sales in Q3 (up from 16.1% in Q2) and 14.9% of all new house sales (up from 11.5% in Q2). Foreign buyers continue to play a far bigger role in new property markets in VIC relative to all other states. In Q3, they accounted for 28.5% of total demand in the new apartment market (28.3% in Q2) and 26% of new houses (16.7% in Q2). There were also notable increases in foreign buying activity in new apartment markets in WA (19% vs 12.9% in Q2) and QLD (17.4% vs 13.1% in Q2). These two states also saw an increase in foreign buying activity in new housing markets (from 8.7% of total demand to 16.2% in QLD and 8.3% to 10% in WA). In contrast, foreign buyers were less active in the NSW new apartment market (down from 16.5% in Q2 to 15.5% in Q3) and new housing markets (14.6% to 10.9%).

[email protected]