Surging Chinese demand for Australian homes is dwarfing efforts to root out illegal buyers as the Australian government struggles to avert a backlash against unaffordable housing.
Since announcing a crackdown on unlawful home purchases in February, the government has forced only one foreigner to sell up. Chinese already buy almost a quarter of new homes in Sydney and their outlay is set to more than double to A$60 billion (US$46 billion) in the six years to 2020, according to Credit Suisse Group AG.
“Forget the anticorruption,” said Ray Chan, managing director of Sydney-based Henson Properties, which sells homes almost exclusively to Chinese. “A lot of money is coming through.”
Amid concern that offshore demand is pricing locals out of the market, Australian Treasurer Joe Hockey plans bigger fines and jail time for those flouting restrictions.
Yet more than six months after a parliamentary inquiry called for a national register of the citizenship of buyers, the database is still a work in progress — leaving officials with no firm grasp of the scale of overseas purchases.
“Current data on foreign investment in property is inadequate, making policy evaluations very difficult,” said Kelly O’Dwyer, the lawmaker who chaired last year’s inquiry, in an e-mailed reply to questions.
A fresh inquiry into home ownership holds its first public hearing today, just as the Australian Treasury warns of a bubble in the Sydney market.
Home values in the nation’s biggest city have jumped 40 percent in three years, while the median house price is now A$900,000, according to CoreLogic Inc. The central bank governor this month said that elements of the Sydney market had “gone crazy.”
Overseas buyers are largely limited by Australian law to new homes and need approval from the Australian Foreign Investment Review Board. Temporary residents can buy new or existing properties with the board’s approval, but must sell them when they leave the country.
Last year’s inquiry also recommended that existing rules should be better policed. The government suspects that many buyers no longer in Australia have not sold their homes as required.
Many Chinese fund home purchases for their children who have settled in Australia, according to Henson Properties founder Chan, who was born in Shanghai and established the firm in 1984 after emigrating.
“Their wealth is building up so fast in China,” Chan said in an interview at his office near Sydney’s Chinatown, recalling one client who tried to put an A$800,000 apartment on his credit card. He expects prices to rise for at least another three years.
Joseph Zaja, managing director of Ausin Group, which offers Australian real estate to buyers in China, expects his company’s sales to double this year to about 2,500 properties, fetching an average of A$650,000 apiece.
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