Foreign Investment has long been a talking point amongst property buyers in the Australian Property Market. Many are against Chinese Nationals, for example, buying up masses of Aussie homes from under our feet, that is, until recently.

The Australian Tax Office has just unveiled new legislation which will require those who are considered foreign residents to pay a 10% withholding tax on properties worth more than $2m AUD. It follows recent changes targeting foreign buyers to now provide proof of residency and citizenship (which will be required when purchasing property in Sydney) while here in Melbourne higher stamp duty rates will apply.

Australian Banks are also clamping down on mortgage lending to foreign buyers requiring these customers to come up with larger deposits. It has been predicted though that the banks’ tougher stance on foreign property investors will hurt some local developers, many of whom are selling much of their finished product to overseas buyers. A decline in foreign investment could also pose further risk to the property market as, in particular, the Chinese market has accounted for a large percentage of growth (about a quarter) over a 10 year period within Australia.

Some say however that foreign investment within Australia is over stated and in actual fact the effect on house prices is only modest. A recent inquiry concluded that ultimately there is no solid evidence to support the idea that foreign investment has been driving up prices. Reliable data on the issue is scarce however it was concluded that foreign investment is, in the end, good for Australia. “Rather than causing price pressures, evidence shows that foreign investments may actually help keep prices lower by increasing supply” *

*Source: News Limited