Buyer's advocate David Morell from Morell and Koren said the younger generation of Australians are being outpriced from the unit market as many international ‘non-residents’ are paying serious money for off-the-plan blocks that will never come back on the market for resale.
Mr Morell said something is "seriously wrong" with the Foreign Investment Review Board when a developer can sell 120 units off the plan in under two hours, and since the global financial crisis the local economy has ridden on the back of Chinese investments.
The Foreign Investment Review Board (FIRB) has promised to concentrate on nabbing any estate agent, lawyer or accountant that flaunts the law surrounding investment onshore from foreign nationals.
Mr Morell warned Chinese nationals are "picking the eye teeth" out of our property market, no-one is stopping it and it will all end in tears.
“The younger generation coming through are possibly part of the rent generation,” Mr Morell said, adding the Foreign Investment Review Board (FIRB) is encouraging people to buy off the plan, "a slap in the face" to the ordinary Australian.
“The FIRB is there to prohibit non-residents paying serious money for housing but they are not doing it effectively and only react to complaints – their complaint is they do not know until a settlement who the real buyer is, even if it is a 19 year-old student who spends $3 million on a block of land.
“The agent knows if the buyers are real and if he doesn’t, the solicitor does, and this is where the typical ‘woe is me’ attitude comes in from Australians, because they then have to go back to market and compete against the Chinese - it’s like a slap in the face.”
CBA chief economist Michael Blythe has publicly criticised the FIRB for failing to adequately address the overseas investment in the local property market, amid increasing concerns it is inflating prices.
Mr Blythe told Financial Review Sunday that foreign buyers, particularly from Asia, are adding an "extra layer of froth to an already bubbly property market" and said that lack of reliable data, which was often a year old, made it difficult to assess the true impact of foreign investment on the Australian property market.
Chief executive officer of the Real Estate Institute of Victoria Enzo Raimondo said the policy of the FIRB is to attract foreign investment in the Australian residential market to increase supply. Anyone, according to Mr Raimondo, can put in an application to develop high-density apartments and get approval.
Mr Raimondo said there is a lot of speculation that everyone looks Asian is a foreign investor, which is definitely not the case.
“The Reserve Bank of Australia conducted a lengthy investigation into foreign investors in Sydney and Melbourne, which found the price points don’t affect first home buyers,” Mr Raimondo said.
“The process of who can and who cannot buy needs to be tightened... the FIRB supply policy is working but perhaps needs to be looked at in relation to the number of high-density apartments in Sydney and Melbourne. But in terms of buying off the plan, I don’t think first home buyers are being priced out of the market.
“The perception of a lot of foreign investment is not substantiated by fact. The FIRB deals with ASIC, the federal police and the ATO to ensure those approved to build developments are bonafide.”