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A buyer’s advocate has said the laws prohibiting foreign investment in established housing are being sidestepped ruthlessly and they need to be applied to agents and vendors.
Australia allows foreign investment in new housing, but prohibits investment in established homes in all but the narrowest of circumstances.
The Weekend Australian recently revealed that the Foreign Investment Review Board (FIRB) had told MPs examining the effects of foreign investment on Australian real estate it was probing 33 suspicious transactions.
However, Morrell and Koren buyer’s advocate David Morrell said it was “absurd that they are only investigating that many cases”, as reported by The Australian.
“It’s a drop in the ocean. We see it all the time — foreign investors purchasing established property here,” he said.
“The reality is [the FIRB] is a toothless tiger.”
Under current laws, only investors are subject to penalties for breaches.
The Australian reported that this has allowed a network of agents here and in Asia to set up agencies and sites pitching Australian established real estate to investors without any threat of legal action.
The result has been more pressure on soaring prices, with buyer’s advocates in Melbourne saying offshore investors had created a 10 per cent price premium, adding $100,000 to the price of a $1 million house.
“It’s the agents and the owners that are complicit,’’ Mr Morrell said.
“They don’t care where the money is coming from, as long as they get it.’’
Strathfield Partners Real Estate managing director Robert Pignataro, who ranked in the top 10 of the Real Estate Business Top 100 Agents 2014, said foreign investment boosts our economy and increases values in real estate, which is a “win, win” situation.
“Most of the stock that overseas investors are buying is heavily priced or in the top end of the market, which the locals don’t touch because they know the local value,” he said.
On the claims that agents are involved in selling established housing illegally, Mr Pignataro said he certainly hasn’t heard of it happening.
“That is a silly comment and that is something that should not have been said, that is for sure,” he said.
“It is a disgrace to our colleagues, and we have had some really hard times and those hard times have turned into good times, and certainly when the times are good, people like to make comments like that.
“But when the times are bad, no one makes any comment, so I disagree with that altogether,” he added.
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