Canberra orders sale of 15 illegally bought properties

SYDNEY • Australia has ordered the sale of 15 properties illegally acquired by overseas buyers, as part of a crackdown on breaches of foreign investment laws.

The properties are located in Victoria and Queensland, and have a combined purchase price of more than A$14 million (S$15.1 million), Treasurer Scott Morrison said in a statement yesterday.

They range in value from A$140,000 to A$5.9 million.

The government has been under growing pressure to show foreign ownership rules are being followed amid concern that overseas buyers are helping to fuel Australia's property boom - housing prices in the nation's largest cities have surged almost 50 per cent since 2008.

Yesterday's announcement brings the total number of forced sales since the crackdown started two years ago to 61, with a combined value of A$107 million. Chinese nationals dominated the list with 25 forced sales. Others came from countries including Britain, Malaysia and Indonesia.

The latest forced sales include a A$5.9 million home in Rockbank, Victoria, acquired by an Indian buyer, and a A$1.1 million property in Doncaster, Victoria, bought by a Chinese national. Eleven of the properties were purchased for less than A$500,000 each.

An additional 36 foreigners opted to sell their properties during the course of the Australian Taxation Office's investigations, the government said. The breaches were identified using data-matching programs and tips provided by the public.

The forced sales underscore the government's "determination to enforce our rules so foreign nationals illegally holding Australian property are identified and illegal holdings relinquished", Mr Morrison said.

An Australian Treasury working paper published in December said "only a small proportion" of the increase in housing prices should be attributed to foreign demand.

Since 2010, offshore buyers have been allowed to purchase new properties only after gaining government approval, and cannot buy existing homes. A 2014 report by a parliamentary committee found these rules were laxly enforced.

Canberra established new rules in December 2015. Foreigners who illegally buy Australian real estate face up to three years in jail or fines of A$135,500 for individuals and A$675,000 for companies. Capital gains are forfeited on forced sales.

Real estate prices have soared in recent years, particularly in Sydney and Melbourne, with housing affordability now a key political issue. Home prices in Sydney have doubled since 2009, making Australia's largest city the second most unaffordable city in the world after Hong Kong, according to researcher Demographia.

There are concerns that cashed-up foreigners, particularly from China, have helped inflate prices, forcing new potential home owners out of the market.

But there are hints of change ahead; real estate agents say Chinese buyers are fewer and the number of home listings is down 25 per cent from a year ago, according to CoreLogic RP Data. So far, neither has had an effect on prices, but auctions in Sydney last weekend saw fewer bidders and more properties unsold.

BLOOMBERG, AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Straits Times on February 07, 2017, with the headline 'Canberra orders sale of 15 illegally bought properties'. Print Edition | Subscribe