The federal government is preparing to roll out a new proposal which would ban foreign investors from purchasing more than half the homes or apartments in any new development.
This proposal is just one of the slew of housing affordability measures to be included in the May budget and aims to help more young Australians enter the property market.
Before 2009, developers could only sell 50% of new dwellings in any development to foreign buyers to ensure that sufficient housing stock was available for local buyers. However, at the height of the global financial crisis, then-Assistant Treasurer Chris Bowen abolished the foreign limit for off-the-plan homes, allowing overseas investors to buy entire developments—provided developers marketed properties locally as well as abroad.
At that time, Bowen said the easing of restrictions was about “enhancing the flexibility in the market” by removing regulations that were deemed unproductive and unnecessary. However, with capital city home prices jumping 10.9% last year (according to CoreLogic), the Turnbull government is under pressure to act, and Treasurer Scott Morrison has promised a housing affordability package in the May budget.
The latest figures indicate that first-home buyers’ share of the market dropped from 13.8% in December to 13.4% in January, according to the Australian Bureau of Statistics.
The proposed change to the foreign investment framework, which is backed by a number of government ministers, is the latest restriction for foreign investors attempting to park their money in Australian real estate.
Foreign investors already face tighter borrowing rules and additional stamp duty charges. They’re also limited to purchasing new or off-the-plan properties.
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