Australia widens probe into illegal buying of residential property by foreigners

Residential properties by the waterfront in the suburb of Point Piper in Sydney, Australia, on March 10, 2015. -- PHOTO: BLOOMBERG
Residential properties by the waterfront in the suburb of Point Piper in Sydney, Australia, on March 10, 2015. -- PHOTO: BLOOMBERG

SYDNEY (AFP) - Australian Treasurer Joe Hockey on Tuesday widened a probe into the illegal buying of residential property by foreigners, with almost 200 sales being investigated for breaching investment rules.

Prices of residential real estate in some of Australia's biggest cities, such as Sydney and Melbourne, have soared in recent years, with concerns growing that cashed-up foreigners, particularly from China, have helped inflate the market.

"The Australian Taxation Office is using all the resources of government to fully investigate any suggestions that come forward that a foreign person has unlawfully purchased real estate in Australia," Mr Hockey said, with 60 officials on the case. "This is the tip of the iceberg. The data-matching powers of the Australian Taxation Office are formidable. And they will give us the power to look right across the system."

The government announced a crackdown on illegal purchases earlier this year and said it would rigorously enforce rules under which foreigners are only allowed to buy new dwellings, and not existing residential property.

Mr Hockey created headlines in March by issuing a divestment order on a luxury Sydney mansion worth A$39 million ($40.5 million) bought illegally under foreign investment rules by China's Evergrande Real Estate Group. It has since been sold.

He said last month that some 100 cases of illegal purchases were being probed, which has now spiralled to almost 200.

The treasurer added that the widening inquiry spanned the breadth of the market, from properties valued at A$300,000 to more than A$40 million.

In one case, an overseas buyer was being investigated for owning 10 homes over two states.

"The Australian Taxation Office is finding increasingly that there is a likelihood of taxation fraud, as well as unlawful purchase of real estate by foreign entities," Mr Hockey told reporters.

Foreign investors who have bought illegally have a moratorium until Dec 1 to come forward, with Mr Hockey adding that 24 of the cases being examined involved voluntary disclosures by buyers.

Mr Hockey, who is a member of Parliament for North Sydney, himself reported a neighbour's property purchase over fears it was obtained through "spurious grounds".

"I referred one of my own neighbours for investigation and found out that yes, they had got approval but on pretty spurious grounds," he said.

"I'm waiting to hear back."

Sydney residential real estate prices have jumped by 15 per cent in the year to May 31, with a median value of A$752,000, according to widely-cited figures by CoreLogic-RP Data.

Melbourne home prices have soared by nine percent during the same period to a median of A$569,500, the data showed.