The weak Australian dollar is attracting large amounts of investment in the property market – not all of it legal. Federal Treasury today submitted details to the House of Representatives lamenting the lack of a central source foreign buyer information and judicial mechanisms to deal with the problem.

home-for-sale-signIt is estimated a third of investment dwellings are being sold to foreign investors, mostly from China. Treasury reports that housing applications have risen from 6,567 in 2012 – 13 to 10,244 in the nine months to March. And while this increase is good for the building and real estate industries it is putting upward pressure on home prices and placing home ownership beyond the reach of many Australians. It is also exerting upward pressure on services supporting the building industry. This is good if you are in the industry, not so good if you are looking to employ them.

Treasury cites the weakness of the Aussie dollar against the Chinese renminbi, the increasing unaffordability of dwellings in Chinese cities, continued growth of Chinese middle class, and lack of foreign investment oversights as the main reasons for the rising flood of investment.

Liberal Chairperson Kelly O’Dwyer is very concerned about the consequences of foreign investment and the difficulties in measuring its benefits. In the medium term one could expect a drop in rental costs and an increase in government revenues from stamp duties. In the longer term those rents will be flowing overseas and property prices will stay beyond the reach of most Australians.

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