The possibility of special charges being imposed on foreign property buyers investing in Australian real estate should be under consideration, according to a federal parliamentary inquiry.
With new UBS data showing foreign investors are likely fuelling Australia's housing boom - potentially buying up to 40 per cent of all new homes and up to one in eight Australian sales overall - the inquiry discussed what the possible effects of a special tax, fee or increased stamp duty on foreign buyers may be.
Committee chair Liberal MP Kelly O'Dwyer asked about the potential impact of the charge at the inquiry on Friday, with CBRE's Justin Brown indicating increased charges in cities including Singapore and Vancouver had changed the investment preferences of international real estate investors.
However, Reserve Bank of Australia (RBA) assistant governor Christopher Kent told the inquiry that rising house prices in the past 12 months have been driven by low interest rates and a growing population, rather than foreign investors.
In response to a possible special tax on foreign investors, Mr Kent said he couldn't “speak for the bank as a whole, [but] would it have an impact? One would imagine at the margins that it would".
If the move were to been given the green light, it would raise extra revenue for the federal coffers while also curbing excessive property demand from overseas.
The inquiry also recommended that extra data be collected around whether buyers are citizens, permanent residents, temporary residents or overseas investors.
Earlier this month, Real Estate Business reported that wealthy foreign investors buying homes and letting them sit vacant in order to avoid detection by the Foreign Investment Review Board (FIRB) needed urgent regulatory attention.