Investing in Australian Property from Overseas

Australia is highly inviting to people seeking to invest in property. It is politically stable, relatively free of natural disasters and has low unemployment. Property prices double every seven to 10 years.  Finding property with is one of the easiest ways to locate houses for purchase.

The supply of houses is low while demand is high: supply of new housing is restrained because there is a shortage of workers in the building industry, as most choose mining because pay is better and many migrants arrive in the country every year, increasing demand. The tax scheme is very friendly to people based abroad who buy houses in Australia. Higher property prices have resulted in high demand for properties for rent.

Australia was named the best country to invest in property in 2010 and the United Nations Development Program said that the country’s quality of life was the second best in the world, after Norway – although Australia is rather warmer than Norway. Australia is a favourite holiday destination the world over; so many people will already have positive first-hand experience of the country.

Estate agents have observed that an increasing number of overseas-based bidders wish to invest in Australian real estate, and are increasingly seen at auctions throughout the country. John Bongiorno, the director of Marshall White & Co of Melbourne, said that international buyers constituted 15 percent of sales. He said his overseas clientele was predominantly Chinese and some had a “fly-in, fly-out” approach that sees them arriving in the country, attending an auction and then flying out, all on the same day. His company has established alliances with Chinese organisations to better serve this segment of the market. Many buyers also come from the United Kingdom, as the weather is much better, there is no language barrier and customs are similar. The United Kingdom was the leading overseas source of people wishing to buy houses in Australia until it was overtaken by China and South Africa in 2009.

The rules for investing in property in Australia by overseas investors were relaxed in 2008 to lure investors to the country and revitalise the property market, but have been tightened again after the number of overseas buyers surged. Temporary residents of Australia must now obtain permission from the Foreign Investment Review Board unless a house is new and must sell their property if they subsequently leave the country. Property cannot be purchased for speculative purposes. Temporary residents can purchase only one house and must live in it. Only new properties can be purchased.

Rules were relaxed in some respects. Now, building must commence within two years of purchasing vacant land, where previously only 12 months was allowed. Developers are now no longer restricted to selling a maximum 50 percent share of a development to overseas buyers.

Kevin Rudd, the former prime minister, said that foreign speculators must not be allowed to force up prices for Australians wishing to buy their first home. A government briefing paper entitled, ‘Foreign Investment Policy in Australia’ said the government’s foreign investment policy should channel investment from abroad into activity that directly boosts the supply of new housing. The Residential Development Council predicted that house prices in the country would continue to rise.

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