A decade on, except for a brief period in 2009 when restrictions were relaxed after the GFC, the restrictions on foreign buyers remain in place.

Curbs on out-of- town Chinese buyers have become more common across provincial capitals. Prices in major cities have continued to rise even as the restrictions on both out-of- town buyers and city locals have become more onerous.

For example, the Shanghai market remains robust at near record price levels even after a regulation requires that Shanghai local buyers cannot take out second mortgages to purchase second properties in Shanghai until after their first mortgages are paid out, and then they can only secure bank loans up to 30 per cent of the value of their second properties.

In contrast, smaller cities where the property prices have been more subdued are far more accommodating of out-of- town Chinese buyers and in many cases even foreign citizen buyers. As market conditions have changed, the Chinese government at national and city levels have made numerous tweaks to the regulations.

Australia's regulation of the residential property market has largely stood at a standstill in stark contrast.

Successive federal governments have not changed regulations in light of market conditions.

Foreign citizens without Australian residency rights continue to be able to purchase new apartments "off the plan" even in major capital cities with local housing demand at record high levels.

There is no limit on the number of "off the plan" apartments that a foreign buyer can purchase.


On the perceived strength of the demand among foreign buyers for new apartments in major capital cities markets, some State governments only move has been to take the opportunity to raise substantial new taxes on these foreign buyers equal up to potentially the first year or more's worth of net rental proceeds.

At the same time, no regulatory effort has been made to try to resuscitate other housing markets with falling prices.

Regardless of how moribund the housing markets in Mackay, Moranbah, Perth or Townsville might get, foreign nationals are blocked from buying existing residential property.

The real estate market needs regulations that reflect the local market conditions and these conditions change.

It would not take too much of a leap of faith to think that, if the Australian regulations were adapted so that cities such as Perth were more open to foreign national buyers and Sydney more restricted, that foreign buyer demand could be directed to where it is most needed to provide liquidity in a down market and to support local economies.

At a time when new housing supply in major capital cities is being added to by raising the building height and density levels around rail hubs, a policy that steers foreign buyers into "off the plan" apartments purchases in major capital cities will put them into the same space as many would be local first home buyers.

Luke Filei is the former Vice-President and General Counsel of Real Estate for Walmart Asia Realty.