Australia Property

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More foreign buyers forced to sell properties

• ROB TAYLOR
  
• DOW JONES
  
• SEPTEMBER 16, 2015 2:41PM
  

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The Sydney mansion Villa del Mare was sold this year as part of the government crackdown.Source: News Corp Australia
[b]A crackdown on illegal investment in real estate has broadened, with almost 500 properties worth more than $1 billion in total under investigation and more foreign buyers forced to sell properties.[/b]
The government has been under pressure to rein in an investment-driven surge in home prices in Sydney and Melbourne, amid growing criticism that wealthy Asian buyers are making the property market increasingly unaffordable.
Treasurer Joe Hockey said divestment orders have been served on five properties across the country, forcing their owners — who hail from Singapore, Indonesia, the UK and China — to sell homes. He added that the crackdown is continuing despite political turmoil this week that saw Malcolm Turnbull replace Tony Abbott as prime minister.
“The purchase prices of the properties range in value from $265,000 to $8.1 million,” Mr Hockey told reporters in Canberra. “The foreign investors involved either purchased established property without Foreign Investment Review Board approval, or had approval but their circumstances changed, meaning they were breaking the rules,” he said.
Many Australians fear cashed-up foreign investors could put homeownership out of reach of much of the population. Mr Hockey told The Wall Street Journal last month that equity-market turmoil in China could drive even more Chinese buyers to seek havens by investing in Australian property.
China last year overtook the US as Australia’s largest source of investment from overseas, with a total of $27.6 billion last year, according to FIRB, the foreign-investment watchdog. Real estate accounted for almost half of that.
The latest divestment orders bring the number of properties hit by the crackdown to 12. In March, Mr Hockey ordered a Hong Kong-based buyer of $39 million Sydney mansion Villa del Mare to sell after investigators said it was purchased illegally.
This time, the properties netted by the crackdown are scattered across the country and include homes in the cities of Perth, Sydney, Adelaide, Brisbane as well as the Gold Coast.
Mr. Hockey said all five owners had voluntarily come forward to detail their investments, meaning they would have a year to sell their homes rather than the usual three months, under an amnesty offer announced by the government in May.
The Reserve Bank of Australia has warned the nation’s property boom is unbalanced and potentially dangerous to a fragile economy, as economists become increasingly nervous about the possibility of the country entering a recession for the first time in 24 years.
Australia’s economy grew by 0.2 per cent in the second quarter from the first three months of the year and 2 per cent from a year earlier, its slowest quarterly growth in four years in the second quarter.
The Reserve Bank of Australia is forecasting 2.25 per cent growth for the year, but a dip below 2 per cent could put the prospect of an interest-rate cut back on the table.
Dow Jones

Five homes on block in foreign owner clamp

• THE AUSTRALIAN
  
• SEPTEMBER 17, 2015 12:00AM
  

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Samantha Hutchinson
[Image: sam_hutchinson.png]
Property Writer

[b]Five more homes around the country will be forced to market as the government continues its crackdown on illegal foreign investment in property.[/b]
A boutique penthouse worth more than $8.1 million in Elizabeth Bay in Sydney’s eastern suburbs is among five properties that will be forced for divestment, after its owners came forward as part of an amnesty on illegal purchases that ends in November.
The top-floor apartment at Darnley Hall on Onslow Avenue was bought by Paul Longmuir and wife Elain Wei Ah Kwan from property developer Tony Benjamin in 2009. The Longmuirs have recently spent $16m buying a sprawling mansion in Sydney’s Bellevue Hill, but sources indicate this home is not under suspicion for breaching foreign investment rules.
Because the owners declared themselves, they will have 12 months to sell the home, compared with three months for owners who do not come forward, and will not be referred for criminal prosecution. “The foreign investors involved either purchased established property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules,” Joe Hockey said.
Other homes up for divestment are in Ardross in Perth, Underdale in Adelaide, Stretton in Brisbane and Labrador on the Gold Coast.
The low range of the divestments is $265,000, busting the myth illegal property investment is a pursuit of the ultra-wealthy.