Australia set to tighten rules for foreign property buyers to stem surging prices

Australia has proposed strict new rules to control rising home sales to foreigners, a trend that is putting property prices out of reach of many first-time buyers and is politically hazardous for Tony Abbott's conservative government, whose support is slipping, the Wall Street Journal reported.

A government committee assigned in March to probe overseas purchasing of Australian property issued recommendations Thursday. These included stiffer penalties for those breaching current rules, amendments to migration laws to detect offenders, and better resources for the foreign-investment watchdog to police foreigners' home-buying activity, said the Journal.

The move is aimed partly at stemming several years of surging property prices that have sparked public concerns about the affordability of houses and apartments. The worry is that foreign money from places like China and Southeast Asia is being channeled into Australian property out of sight of regulators, said the paper.

The rules on property buying by foreigners were strengthened four years ago to restrict purchases to newly built homes. Temporary residents were allowed to buy homes on the secondary market, but required approval from the foreign-investment regulator, and then to sell them when leaving the country.