Dr Anthony Pun

On the surface, the headline sends a xenophobic chill down the spine.  One might ask a few questions on this issue.  Why is the foreigner buying our houses?  The foreign student education industry and the temporary worker on a subclass 457 visa, is the catalyst for the purchase of residential housing when there is economic savings in owning the house compared to paying rent.  There is also a future saving if the student or the temporary worker is able to secure permanent resident in the future.  If the house is no longer in use, it can be rented out at market price or sold for capital gain.  The basic reasoning is sound practice in any capitalist country and when other tries to do the same they are labeled "raiders".  Can Australia afford to be insular to the global economy?  

The second question relates to the effectiveness of the Foreign Review Investment Board (FRIB) in managing the current regulations governing the buying of Australian properties by foreigners.  It would assist the debate of this issue if the relevant statistics regarding foreign ownership of Australian property, location of property, commercial or residential, and how did it inflate the prices and by how much.

CCCA supports housing affordability for all Australians but the proposed new rules for temporary residents and foreign students in buying Australian property are punitive.  Screening is reasonable, but forced selling and punishment is not.  Would this rule be retrospective for all buyers?   If the government wants to control the micro-economics of domestic housing, tougher regulations can be imposed by the FRIB by "capping" or putting a quota of the number of properties that can be bought.  Capping is a very commonly used regulatory instrument in immigration. Once a property is bought, no such draconian regulations should be used to force the selling of the property.  However in the real commercial world, some genius will come up with a new idea to defeat the regulations.  What would the world thinks of us if we implement such draconian regulations?

The third question is why the "xenophobic" reaction?  Why use the foreigner as a scrape-goat?  Haven't we forgotten about the billions of dollars earned by Australia in providing an export education industry?  Those temporary foreign workers are helping to address the labor shortage and thus helping the Australian economy.  If the government is so worried about the affordability of housing, it can move some of the education revenues and visa fees to subsiding local purchasers when there is evidence of a price inflation caused by foreign buying.

Another way to address the housing shortages and affordability is to encourage property development, but please do not ask the foreigners to fund the development because it is embarrassing.

Dr Anthony Pun

National President, Chinese Community Council of Australia

Attached Article:

Prime Minister Kevin Rudd slams door on Asian raiders
Phillip Hudson
From: Herald Sun
April 24, 2010 12:00AM

FOREIGN students and temporary residents will face tough new rules when buying a house and will have to sell on leaving Australia.

The Federal Government's crackdown, to be announced today, reverses its December 2008 decision to relax foreign ownership rules.

Bowing to public pressure, the Government will also introduce a hotline for concerned locals to "dob in" foreigners they suspect of breaching the rules.

Under the rules, temporary residents and foreign students will be:

SCREENED by the Foreign Investment Review Board to determine if they will be allowed to buy a property.

FORCED to sell property when they leave Australia.

PUNISHED if they do not sell by a government-ordered sale plus confiscation of any capital gain.

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REQUIRED to build on vacant land within two years of purchase to stop "land banking".

Failure to do this would also lead to a government-ordered sale.

There have been growing claims that real estate prices have been forced up by wealthy Asian families, especially from China and Korea, buying up property and outbidding locals at auctions.

The Government is concerned by anecdotal reports that foreigners are "collecting" houses, often in the same street, and leaving them empty when there is a shortage of housing.

Assistant Treasurer Senator Nick Sherry said he wanted to ensure foreigners did not put "pressure on housing availability for Australians".

Treasury is investigating 50 suspicious residential buys by foreigners in Melbourne.

Senator Sherry said the changes would "ensure that investment is in Australia's interests and in line with community expectations".

He said the Government would catch cheats with new powers allowing it to cross-match information from Land Victoria and the Immigration Department.

It will also rely on members of the public to report suspicious property buyers to a new hotline: 1 800 031 227.

"I want to make sure everyone in the community has a direct line to report their concerns," Senator Sherry said.

"If you do the wrong thing, you will be found out."

New penalties, which may be linked to the value of the property, will apply to buyers, sellers and estate agents.

There is no data showing how many properties have been bought by temporary residents.

Since the Government's 2008 change, the median house price in Melbourne has risen from $450,000 to $524,500.

Foreigners living overseas are still prevented from buying existing homes and only allowed to buy or build new ones