Reuters reports that foreign investors who illegally buy houses in Australia, and agents that enable them, face hefty fines and prison terms of up to three years under new penalties announced on Saturday aimed at cooling soaring property prices.
The new and expanded punishments come in the wake of rising foreign investment in Australian real estate and widespread evidence of abuse of current laws that prevent foreign buyers from purchasing existing homes.
“We want to ensure that illegal foreign investment is not unnecessarily driving up prices,” Prime Minister Tony Abbott told reporters in Sydney, where house prices have risen by about a third in the past three years. “We want to maximise the opportunities for Australians to buy a home at the best possible price.”
Australian property has long been a popular choice for Chinese money but the flow of investment has accelerated. China overtook the United States to become the largest source of foreign investment in Australia last year, driven by a surge in real estate purchases.
There will also be increased scrutiny over foreign investment in agriculture, amid concerns about a growing number of sales of farms and food processing businesses to overseas interests.
Abbott does not specifically mention Chinese investment but the implication is obvious. Earlier this year Treasurer Joe Hockey ordered the Chinese owner of a A$39 million Sydney harbourside mansion to sell within 90 days, saying it was bought illegally via a string of shelf companies. Hockey told Reuters on Friday that the home had been sold and more than 100 property purchases were under investigation.
In the state of Victoria foreigners buying houses will be subject to two new taxes as the state government tries to cool the rising property market.
Funny isn’t it, how the politicians admit the problem exists in Australia, but according to John Key and National, there’s no sign of it in New Zealand.