Canada Bans Foreigners from Buying Homes in a Bid to Make Properties More Affordable. Should Australia Follow Suit?

SuperFly 420 on 02/01/2023 - 22:51
Last edited 02/01/2023 - 22:58

Since January 1, Canada has banned purchase of residential property by non-Canadians for two years.

Like many countries during the pandemic, Canada saw huge price increases for both sales and rentals as borrowing rates plunged to record lows, taking inventory with them.

Prime Minister Justin Trudeau said: “The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors. Homes are for people, not investors.”

https://www.smh.com.au/world/north-america/canada-bans-forei…

What do you think?

Would you like a similar scheme in Australia?

Poll Options

  • 977
    Yes, house prices must come down making it more affordable to everyone
  • 52
    No, I don’t think this would not work in Australia
  • 63
    No, I don’t want this scheme because I want my properties prices to go up
Home & Garden

Comments

  • Jimothy Wongingtons on 02/01/2023 - 23:24
    +49

    Yes but I don’t see it happening unfortunately

    • [Deactivated] on 03/01/2023 - 20:25
      +19

      Even if it did, there are so many "Australians" that could be used as title holders it would have no effect.

      • BargainCowboy on 04/01/2023 - 09:17
        +1

        We all know who you are referring to 😂

    • Skinnerr on 04/01/2023 - 09:59
      +2

      Also it's closing the barn door after the horse has bolted.

        • Skinnerr on 05/01/2023 - 18:41
          +5

          Rubbish. Most are wealthy, but domestic, property owners that just accumulate property/wealth ad infinitum. The definition of a greedy pig.

    • RedHab on 04/01/2023 - 19:21
      +17

      Actually Canada's ban will make things worse in Australia, as many foreigners who would have bought Canadian property will now buy in Australia.

      • CalmLemons on 05/01/2023 - 00:16
        +2

        Yes.

        Quite a complex issue too. Firstly, they aren't even that many overseas buyers of our property. And if so, what types?

        Most of the city apartments are the ones sold to buyers from asia and also aussie farmers - right from the mouths of the city real estate agents.

        These people aren't buying houses in low to middle income surburbia - new families and genuine migrants are.

        At the end of the day, it is SUPPLY VS DEMAND. and avoiding decimating your building industry. Kill off apartment sales, you kill off all those union jobs. Goodluck.

    • supersabroso on 05/01/2023 - 03:29
      +3

      Isn't this already the case? We ban foreigners from most of the market as they can only buy brand new properties to help drive new investments that are too expensive for residents to afford. This only accounts for 7.9% of sales here and it gets taken off the market permanently for foreign investors the moment they decide to sell.

      Our government is already smart, adding an 8% foreign buyer stamp duty surcharge + an approx. 1% application fee to buy a property to make it more profitable when giving up one of our houses to them so that citizens get an advantage when bidding for the same new property/vacant land + new property package together.

      • dimes on 05/01/2023 - 23:15

        Not sure if it's still the case, but when I was looking into it, the foreign buyer stamp duty was voluntary. No one actually makes an effort to enforce this.

        Would be happy to be corrected.

        • ripesashimi on 06/01/2023 - 12:06

          I am happy to correct you that there is no f ing way that State Revenue will look past that 8% of purchase price. We are talking about a six figure minimum for each property in NSW for example. Plus another 13k or so for a FIRB application.

          Even for simple mistakes, say transfers between partners which are only exempted if you use it as PPOR, but at the time of purchase, you did not think it was important. There is Determination and there is Opinion, and State Revenue always form the most adverse Opinion. If they can collect that sweet money legally, they will.

    • Creamsoda on 05/01/2023 - 18:42
      +3

      Foreign investment in property accounts for very low % in over all foreign investment.

      Here is a video on what's REALY affecting our property prices and it's explained really well.

      https://youtu.be/_ohj_pOjp6U?t=635

  • resubaehtgnolhcs on 02/01/2023 - 23:29
    +37

    It would be interesting to see what percentage of Australian residential properties sold in any given year are purchased by non-Australians. This, I would assume, could give us an answer to your question OP.

      • SydStrand on 03/01/2023 - 00:47
        +57

        Yes, it matters. Does allowing foreign purchase result in a true net negative (housing unaffordability) relative to its positives (foreign investment)? If the answer is no, then this policy is pointless. According to that article, foreign buyers were at most 9% in Vancouver. Quick Googling revealed even lower figures for Australia, so single digits. So will these policies suddenly bring house prices back to Earth? No. It's lip service to easy scapegoat. The problem is that this country already has a fetish with treating property as a means of generating wealth rather than housing, and favourable taxes that preference generations that have already accumulated it.

        • StonedWizard on 03/01/2023 - 06:43
          +15

          The majority of Australia population live on the East Coast. Even then, it’s basically Melbourne and Sydney.

          So the only way to have affordable housing is to expand the city boundaries, make other cities more attractive or increase interest rates.

          Hopefully one day soon, we can setup cities in the middle of Australia.

          • EightImmortals on 03/01/2023 - 09:19

            @StonedWizard: "So the only way to have affordable housing is to …….increase interest rates."

            huh?

            • Quantumcat on 03/01/2023 - 10:10
              +5

              @EightImmortals: When mortgages cost more then fewer people buy/more people are forced to sell and prices come down

            • StonedWizard on 03/01/2023 - 11:12
              +3

              @EightImmortals: We can see this from when rates dropped during the pandemic to now when they’re increasing.

              A lot of people in Australia but property as a way to get rich. Instead of buying to have a roof over their head.

              When rates are very low, this allows people to borrow up to their eye balls and forces prices up. Especially in major cities which tend to have much higher incomes.

              So by raising rates, this stops this from happening.

              I can’t speak for other cities. But in Sydney we need better urban sprawl management. We need high speed trains, better transport and building practices. Sydney CBD and surrounding is just for the Uber wealthy, where as I’ve found suburbs closer to Melbourne and Brisbane are more affordable for the middle class.

              The reality in Australia for many is if you want a higher income you need to be in Sydney or Melbourne. More needs to be done to incentivise people across the country and not jus fixate in 2 - 3 cities.

              Hopefully we can one day allow people to have options and have more cities in the middle of Australia. Like you have in the US. Where people have more choice on where they can work.

              Otherwise we’ll end up having cities like LA. Where there’s no middle class and just extremely poor or rich people.

              • cadwalader on 04/01/2023 - 14:10
                +1

                @StonedWizard: Increasing interest rates drive the purchase price down yes but given most people buy with mortgages and look at their affordability in terms of mortgage repayments, it doesn't really make property more affordable.

                Making properties more affordable means making it cheaper to own and making it easier for more people to own. Increasing supply and or changing our expectations on housing will be the most effective solution forward.

                Detached housing in a metro area that has both more than 5 million people and more than 20% of a countries population is always going to be a luxury if any decent commute times into the CBD is to be maintained.

          • twister292 on 03/01/2023 - 13:42
            +1

            @StonedWizard: Increasing rates may make property cheaper, but it also reduces borrowing power so it doesn't really make property more affordable.

            • StonedWizard on 03/01/2023 - 13:55

              @twister292: You’re not wrong on that. But I feel it helps level the field a bit, by stopping Uber wealthy from driving prices up.

              Maybe the only real solution is to increase supply.

              • Nickels n Dimes on 03/01/2023 - 21:25

                @StonedWizard: Interest rates don't alter housing affordability, since all available housing will be bought after some time either way — if Interest rates are lower more first home buyers will be able to afford the current price of entry which is over $500k in capital cities, if Interest rates are higher, only wealthier buyers and investors can afford to buy, but they will continue to do so, no matter what, as the price of real estate keeps growing in the long term. Even a recession will not change that dynamic at all, it will merely wipe out many recent owner occupier home buyers and mum'n'dad investors, while the available stock that is now a little cheaper gets snapped up by investors with deeper pockets (banks and brokerage firms that lend based on their existing portfolio).
                The only possible situation that will end that is A: sunset or winding back of negative gearing, or B: major population reduction in Australia (ie. War on our shores, or serious epidemic like the black death).

          • nobro25 on 04/01/2023 - 04:50
            +3

            @StonedWizard: It's just right down to politics and the Australian culture unfortunately. We're so laid back in council forward planning, infrastructure and development it's not funny.

            What you're talking about won't happen till maybe the year 2100 or later.

            Whilst we have all these private companies setting up businesses and contracts to buy land and build high rise apartments, because they're lucrative and can generate plenty of wealth. They don't give a rats ass about building roads, schools, shopping centres etc. All they care about is selling and generating easy money. Sometimes at the cost of using cheap labor and materials which becomes costly for the buyer.

          • Roman Sandstorm on 05/01/2023 - 14:14
            +4

            @StonedWizard: @StonedWizard:

            Hopefully one day soon, we can setup cities in the middle of Australia.

            Hopefully we can one day allow people to have options and have more cities in the middle of Australia.

            On the off chance that you were being ironic in these comments….

            So, how has setting up cities in "the middle of Australia" gone over the last few hundred years?

            Ummmmmm….

            Our largest non-coastal cities are: Canberra, Toowoomba, Ballarat and Bendigo. But none of these would really be described as "middle of Australia".

            Australia is probably the world's most urbanised large country. This is completely at odds with our own social mythology, of course; and the projected image of Crocodile Dundee/Hunter. Not to mention what is portrayed in about 90% of Australian feature films.

            The reality is that we like to think warmly and fuzzily of the outback, but almost no-one ever wants to live there. And for good reasons. There's pretty much no water (except for generational floods like at present), and most of the time it's as hot as the surface of Venus. And this is only going to get worse in the future with climate change.

            Only enormous investment has enabled Canberra and Albury-Wodonga to grow, albeit oh-so-slowly. And places like Toowoomba, Ballarat and Bendigo have grown only slowly, and then largely due to the dissipation and consolidation of other country towns.

            Housing issues in Australia are a complex mixture of the economic, political, social and psychological. I am confident that a 'solution' to housing problems however, is not encouraging or even incentivising non-coastal settlement. This has not worked in the past; I can't imagine it working in the future.

        • greatlamp on 03/01/2023 - 13:19
          +8

          The low % is misleading. If 1 house is sold 100k above asking, all the properties in the area will instantly get repriced 100k higher. If 9% of buyers have no budget contraints, that will increase the price of all properties sold, not only the ones they have purchased

          • killz111 on 03/01/2023 - 22:10

            @greatlamp: That is a bad take. Since house prices require an active buy to maintain. So if 1 person is willing to pay $1000 for 1 out of 10 apples but the next person is only willing to pay $10, do you think the remaining 9 apples will sell for $1000?

            • greatlamp on 04/01/2023 - 08:32
              +2

              @killz111: No, you are comparing two makets that are not relatable. Think of the share market, the value of all shares is based on the sold price of the last trade.

              Commodities and consumer goods must be sold for the manufacturer to stay in business. The owner of a house does not need to sell if the price is less than they expect.

              • killz111 on 04/01/2023 - 09:08
                +1

                @greatlamp: The theoretical price implied by last sale price is irrelevant if no one wants to buy at that price. Just ask all the home sellers whose houses passed in at auction recently.

                What matters is wh at the next buyer is willing to pay. The last sale price is merely a price signal.

                • greatlamp on 04/01/2023 - 09:31

                  @killz111: Not disputing that. It doesn't change the fact that real estate is not a commodity market. You said yourself "passed at auction". Apples don't pass at auction, they must sell

                  • killz111 on 04/01/2023 - 09:48

                    @greatlamp: Really? You think sorry markets can still sell apples if they priced them at $100 kilo?

                    A goods, commodities or not require a willing buyer to achieve the price.

                    • greatlamp on 04/01/2023 - 10:45

                      @killz111: I already explained real estate is not a commodity market. You brought up the incorrect example of apples. Instead of picking holes, why don't you explain to me why real estate always increases in price, while the price of crude oil, TVs, microchips, cars, etc etc go up and down based on economic conditions.

              • cadwalader on 04/01/2023 - 13:58

                @greatlamp:

                The low % is misleading. If 1 house is sold 100k above asking, all the properties in the area will instantly get repriced 100k higher. If 9% of buyers have no budget contraints, that will increase the price of all properties sold, not only the ones they have purchased

                The same house does not need to sell but you cannot say the same for every single house in an area or areas near to it. There is always a baseline of sales due to death, divorce or distress.

                When a property is being value, the valuers don't just look at the 5% most expensive properties in the area. They look at the whole market and assess the property's place within that market.

                Also, foreign investors and banks aren't so dumb as to consistently overpay for properties. They don't get emotionally attached to their "forever home". They aren't rushed for time because they just sold their current PPOR. They aren't fixated on specific locations because of friends, family and work. If the seller's/agents/buying competitors pricing are above the wider market or they'll just move on to another property that has better value.

            • PopCounty on 04/01/2023 - 09:58

              @killz111: Greatlamp is right. We as a buyer are driven by market value of a property shown in RE/Domain. At least for reference purposes. And that price gets updated based on what similar properties have been sold in the area. So any home sold for $100k more would indicate in increased estimated market price for other similar houses being sold.

              • killz111 on 04/01/2023 - 10:04
                +1

                @PopCounty: What happens when no one else is willing to pay that 100k extra after the previous sale? House prices reflect buyer purchasing power. If there aren't enough buyers locally after foreign investment demand has been exhausted, then the price naturally comes down.

                • PopCounty on 04/01/2023 - 10:44

                  @killz111: Prices would come down and which would reflect in suggested price as well. No denying that. But at once this house has still had increased suggested price. And has more potential to be sold near around that increased price.

                  • killz111 on 04/01/2023 - 10:50
                    +1

                    @PopCounty: Yeah I agree with that. It's definitely an influencing factor. What I was debating with @greatlamp was whether a small percentage of high paying buyers significantly skews the market which does not.

                    Case in point, there were almost zero foreign investment in residential properties in the covid years. And house prices blew up.

                    • greatlamp on 04/01/2023 - 11:03

                      @killz111: That is not a case in point.

                      It's very obvious why house prices increased during COVID. House prices blew up because interest rates went down, increasing the borrowing power of all buyers.

                      • killz111 on 04/01/2023 - 11:05

                        @greatlamp: So what you're saying is factors that impact all buyers is more important to pushing up house prices than a single digit percentage of rich foreign buyers then?

                        Maybe our increasing house prices over the last decade has more to do with ever decreasing interest rates than a small group of foreign purchasers?

                        • greatlamp on 04/01/2023 - 11:17
                          +1

                          @killz111: Yes, interest rates are more important than the effects of foreign buyers. That doesn't mean foreign buyers have zero impact

                          • killz111 on 04/01/2023 - 12:07

                            @greatlamp: And where did I say zero impact?

                            • greatlamp on 04/01/2023 - 12:21

                              @killz111:

                              What I was debating with @greatlamp was whether a small percentage of high paying buyers significantly skews the market which does not.

                              Zero or near zero. If you want to change the point of the discussion then better to start a new comment thread.

          • DrSwag on 05/01/2023 - 10:16
            +1

            @greatlamp: I agree that paying 'above' does push the market up.

            The large American equity firms like Blackstone have a strategy where they will pay more for homes in a clustered neighborhood and will always beat the market on bids. The ultimately plan is once you own 10 homes at say $500k and then buy the 11th at $600k (assuming $100k over value), your existing properties are all re-valued to $600k. Thus $100k over-payment resulted in $1m in capital gains.

            Even if home sales purchased is less than 1%, they are active in the market and raise the floor by bidding.

          • SydStrand on 06/01/2023 - 20:06

            @greatlamp: Where is the evidence that international buyers are, as a trend, paying $100k more than market value for properties? While repeat purchases of whale investors could theoretically drive up surrounding home values, this is not a real problem for the majority of us. Believe it or not, no one wants to be a sucker and spend $100k more than they have to, even internationals buying through intermediaries.

            Also, anyone can be accused of such hypothetical buying behaviour: AFL players, dotcom millionaires, rich heirs, etc. Internationals are a drop in the bucket with the majority buying homes in middle class areas (often ones with existing migrant communities), and there's no evidence to suggest they're outcompeting. This notion of international spendthrifts snapping up properties willy nilly to drive median house prices into the stratosphere, is simply a canard to distract from the real issue: not enough housing stock, and a taxation system that advantages investors.

        • Grazz989 on 04/01/2023 - 17:26
          -2

          It's not fair to look at % of purchases being foreign vs. local. It makes sense to compare it to the deficit in housing. If there's a 9% deficit in housing, then that makes all the difference in the world for house prices.

    • dcep on 03/01/2023 - 02:44
      +9

      House prices risen unprecedentedly in 2020 / 2021 , during lockdowns and borders were shut.

      Who was buying, bidding up the price ?

      • pais on 03/01/2023 - 12:57
        +7

        The housing market is more complex than that & it's disingenuous to point to this as if it's evidence that foreign investment doesn't impact the market. Australians were able to get capital on historically very favourable terms, there was a huge injection into the economy to stimulate the construction industry and the cost of raw materials have also sky rocketed. No surprises there was some short term surging which has eased almost immediately as access to capital has swung back to historical norms.

        By the by, borders being shut doesn't actually stop foreign investment - homes are sold sight unseen by foreign investors all the time, using a third party. The number of FIRB approvals for residential dwellings reduced by <10% during FY19/20 which should probably give you an indication that you're barking up the wrong tree.

        Saying "Aussies were buying houses during COVID" does not disprove that increased demand from foreign investors can also impact the real estate market. All else being equal: removing a subset of potential buyers in any market is going to impact supply & ultimately the price. It is foolish to argue otherwise as it's fundamental to how markets move.

        • dcep on 03/01/2023 - 13:25
          -4

          House prices have surged in the past year, after a slight dip at the start of the Covid-19 pandemic. In Sydney, house prices rose a record 8.5% between January and March 2021, and overall capital city house prices rose 10% in the year to March 2021.
          Analysts and economists say this is due to domestic Australian buyers and record low interest rates, not foreign and Chinese buyers.
          Eliza Owen, the head of research for Australia at CoreLogic, said foreign investment had actually fallen to a record low during March 2021 – the same month the survey was taken.
          Data compiled by the National Australia Bank shows foreign investors made up only 3.7% of new home sales and 2.2% of established homes in the March quarter.

          You're right that, I'm just a fool barking to a tree like you.

        • killz111 on 04/01/2023 - 10:55
          -2

          When you say third party. Do you count non white buyers that have permanent residency or citizen ship?

          • pais on 04/01/2023 - 18:05

            @killz111: No - not even sure how you've managed to infer that. "Third party" in this case simply means a buying agent, i.e. a person willing to inspect and do the physical legwork in Australia for a would-be buyer that is not able to do so due to their location (overseas in this case). I know Victorians who use third parties to buy investment properties in Queensland, so no idea how ethnicity enters the conversation.

  • cookie2 on 02/01/2023 - 23:36
    +18

    Should've years ago. Won't do it though.

    • WT on 03/01/2023 - 08:51
      +4

      didnt they open it up decades ago because they wanted foreign (china) investing $$?

      House up the road from mums has been empty for over 20 years now, prob closer to 30, the owner pays for mowing, in that time I have seen them twice so they come every decade…

      lowest house price in this area is well over 2m

      • TEER3X on 03/01/2023 - 17:10
        +3

        That's what the government wants, as long as they pay taxes and rates.. higher house prices are good for government coffers

        • Nickels n Dimes on 03/01/2023 - 21:28

          True. Albeit local governments prefer that properties are subdivided to increase rates, and state and federal government prefer the property has improved value so they can impose higher taxes.

  • elgrande on 02/01/2023 - 23:37
    +35

    I'm not sure limiting Australian property sales to Canadian citizens will be particularly useful..

  • randomusername2017 on 02/01/2023 - 23:42
    +3

    Don't the FIRB fill this role now without fear favour or bias..

  • Benoffie on 02/01/2023 - 23:43
    +26

    Yes, but not for the reason of affordability. Houses in a country should be for the citizens of that country. We accept that as the case is most other countries and yet, don't apply it to our own. If foreigners want to buy here, like many other countries, there ought to be tax requirements attached to it.

    The most recent FIRB foreign purchases report I could find - https://firb.gov.au/about-firb/publications/insights-foreign…

    • p1 ama on 02/01/2023 - 23:46
      +3

      Yes, but not for the reason of affordability. Houses in a country should be for the citizens of that country.

      In other words, affordability?

      • Benoffie on 02/01/2023 - 23:55

        No, there's no evidence that diverting the 3000 odd houses purchased by foreigners will somehow see the prices of said 3000 houses drop to enable Aussies to purchase them.

        However, what it will do is change the make up of the market and remove some elements that may be inflationary in some markets. For example, there are some particular suburbs in Adelaide that are grossly overpriced and are continuing to ride a wave when everything else is dying off. When you attend auctions, they are driven by particular groups - Bank of Mum and Dads, cashed up out of towners wanting to be mortgage free, developers and foreigners. Now, if the foreigners were not there, the property may still go for something stupid, but instead of 4 groups, there's now just 3.

        • CowFrogHorse on 03/01/2023 - 00:08
          +5

          What a bad analysis…

          Its not about the 3000 houses purchased, its about the fact that those purchases affect the perception or actions of others which results in higher prices in general.

        • p1 ama on 03/01/2023 - 00:15
          +5

          Now, if the foreigners were not there, the property may still go for something stupid, but instead of 4 groups, there's now just 3.

          In other words, by reducing demand, you put downward pressure on prices - i.e. affordability?

          • Benoffie on 03/01/2023 - 02:27
            +4

            @p1 ama: So simplistic.

            Another example. While pre Covid, foreign investment in Ag land in SA was dropping as locals were banding together to outbid foreign interest and reclaim property

            Did the property suddenly become cheap? Of course not.

            The view people have with affordability is houing dropping to what? What precisely is the figure of affordability?

            Under $500k?
            Under $1m?

            My point is the Australian market is strong enough in its own right to drive its own competition and create unaffordability.

            Any issues around foreign investment are from an ideological perspective, not an economic one.

            https://www.adelaidenow.com.au/news/south-australia/sa-famil…

            • p1 ama on 03/01/2023 - 02:43
              +5

              @Benoffie:

              So simplistic.

              That was purposeful - when discussing things with people who think they understand a subject matter better than they actually do, usually asking simple questions and drawing simple analogies will make them come up with their own arguments and examples that discredit their own point.

              Prime example below:

              Another example. While pre Covid, foreign investment in Ag land in SA was dropping as locals were banding together to outbid foreign interest and reclaim property. Did the property suddenly become cheap? Of course not.

              That's a different situation - in this situation here, you are bidding up the price to drive out foreign investment, which in turn, implies that local bidders actually need to match the willingness to pay of foreign investors to compete.

              The situation we're discussing now is whether we should prohibit foreign investment, which is precisely so that local bidders do not need to match the willingness to pay of foreign investors. This will in turn, put downward pressure on prices.

              The view people have with affordability is houing dropping to what? What precisely is the figure of affordability?

              There is no "figure of affordability", just like there is no figure for "cheap", it is a sliding scale. Things can become more or less affordable.

              My point is the Australian market is strong enough in its own right to drive its own competition and create unaffordability.

              Yes, but unquestionably reducing some demand will alleviate upward pressure on prices. FWIW, you're creating an unsound narrative to defend a point you made which is factually incorrect (i.e. "not for the reason of affordability"), but then go on to make an argument which is based on affordability, i.e. "Houses in a country should be for the citizens of that country", which is the primary determinant of affordability, as housing stock is a primary driver.

              In case I need to make it clearer - by banning foreign investment, we achieve two impacts (i) we reduce capital stock, i.e. "total dollars in the system", and (ii) we increase the housing stock available to locals, these two impacts will drive down prices as locals will have to compete with less capital, and will have more housing stock to choose from, forcing sellers to be more competitive.

              • ThithLord on 03/01/2023 - 11:25

                @p1 ama: p1 ama has an unfettered habit of schooling people on OzB. We love your work, mate

      • Nickels n Dimes on 03/01/2023 - 21:31

        A large amount of those foreign owned properties are used as AirBNBs or for the owner's taking occasional holidays here — that's largely fine, but it results in housing that sits vacant much of the time vs a local tenant living there and having a roof over their head 365 days a year.

    • CaptainCricket on 03/01/2023 - 13:53
      +1

      This is soo illogical. It takes 10 years for a student to become a citizen in Australia these days. So you want them to keep renting until they get their passport? When they spend 4x on fees in uni and are paying same tax like citizens? Also, why should an expat living in this country since a few years be refrained from buying property?

      It makes more sense to ban people who wants to buy in Australia but their residing country is not Australia.

  • nephilim on 02/01/2023 - 23:53
    +6

    Only against those who are against us investing in their country, see Japan, China and NZ..

    • Theoprine on 04/01/2023 - 19:15

      Bingo - how this isn’t an issue for free trade - highly unregulated

  • Caleb Mahon on 02/01/2023 - 23:54
    +26

    This will not work, foreign investors can simply set up on-shore investment firm and bypass such restrictions.

    "Bans foreigners from buying homes" is the kind of tricks that make you feel the government is doing something, while it does nothing.

    An elegant solutions to the housing problem is "Vacancy Charge", change the property owner a amount they cannot afford, forcing them to put their unused property on the market.

    A real solution though, is public housing scheme as implemented in Singapore.

    • hybridex on 03/01/2023 - 18:05

      That's quite a literal interpretation of what "banning foreigners" means - any draftsperson worth their salt would cover for simple workarounds. FIRB legislation already goes half of the way there with the concepts of "foreign person" and "foreign government investor", adapting those definitions wouldn't be difficult. The Corporations Act definitions of "related entity" and "control" would also be helpful starting points.

      Point being, if the government really wanted to do it, it could be done - just doesn't seem likely that it would happen. And like you say, there are probably better ways to go about it anyway.

      • Minimum chips on 03/01/2023 - 20:32

        Well there's more to it than the law being drafted properly.

        A foreign national who is considering investing their money in Australian real estate instead of their own country probably has pretty compelling reasons to do so. They will have the funds to pay someone to lie for them if necessary, and there will be people who offer that service. Like any investor they will consider the risks and rewards.

        I met some foreign property owners when I was in China. Nice folks, but I don't think they would be put off by this kind of law because Australia would still be a safer option than China - for both economic and "Political" reasons.

        So it comes down to enforcement. How much is government going to be willing to spend to enforce a properly drafted law with no loopholes? How effective is that enforcement going to be? I don't know but I'm leaning cynical.

        • hybridex on 04/01/2023 - 11:23
          +1

          Yeah there's a lot to it, which makes it super unlikely (in my view) that this would ever be implemented. It could be done, but there are a lot of costs involved in drafting, enforcement, maintaining etc, which aren't necessarily proportional to the benefit obtained.

  • Pingus on 03/01/2023 - 00:04
    +2

    Yes, house prices must come down making it more affordable to everyone

    But

    No, I don’t think this would not work in Australia

  • CowFrogHorse on 03/01/2023 - 00:10
    -7

    Adding a GST component to sales and purchases would also help. Someone selling would then instantly have 10% less for their next purchase which helps reduce prices.

    • Drakesy on 03/01/2023 - 15:07

      Stamp duty already does that.
      Coupled with Real estate listing fees.

      Basically to break even on a house these days you generally need it to appreciate by at least 10%

      • CowFrogHorse on 03/01/2023 - 17:04
        -5

        No - there should be more tax. Adding the GST in addition to stamp duty would be a good start.

    • morse on 03/01/2023 - 00:16
      +9

      Shouldn’t matter what race you

      I’m not sure that ‘race’ has been mentioned.

        • morse on 03/01/2023 - 01:19

          The Chinese government is definitely unpopular in Australia at the moment. There are low levels of trust from Australians. It’s a shame if this is directed at individuals, but not necessarily surprising. I suspect many Chinese people buying in Australia have similar low levels of trust in their own government and economy hence wanting assets overseas.

          Chinese people should be able to buy as many of whatever they want, because they have money.

          I guess that’s OPs question. Is having money the only criteria people want for the Australian residential real estate market or is there a desire for some level of market intervention to benefit Australian society? There are already rules around foreign ownership, so it’s not a novel idea. China and many other countries also regulate foreign ownership to shape the economy the way they see is best, so just having money doesn’t seem to be the only important issue.

          • SpotTheOzzie on 04/01/2023 - 12:05
            +1

            @morse:

            My bad, I should have said ethnicity

            No one mentioned ethnicity either.

    • p1 ama on 03/01/2023 - 00:20
      +1

      Won’t work here

      What's the primary difference between Canada and Australia which will make it not work here?

      we are a capitalist society

      What does this have to do with capitalism? Land and means of production will still be owned by private individuals, with prices set by market forces, not central command. In other words, capitalism.

      If you have money you should be able to buy as many of whatever thing you want to buy, no?

      There are plenty of restrictions on what you can and can't buy.

      Shouldn’t matter what race you are or where you’re from.

      Where did anyone say anything about race or where you're from? This is about whether foreign nationals who do not live in Australia should be allowed to buy property in Australia. This has nothing to do with what race you are (you could be any race, and live in Australia or not live in Australia), or where you are from (you could be born anywhere and live in Australia, or not live in Australia).

      • Ghost47 on 03/01/2023 - 01:02
        -1

        What's the primary difference between Canada and Australia which will make it not work here?

        Not sure just feel like it won’t work.

        Land and means of production will still be owned by private individuals, with prices set by market forces

        Yes.. like foreigners (private individuals) buying Australian land and property (land and means of production) at auctions (prices set by market).

        There are plenty of restrictions on what you can and can't buy.

        So should we ban foreign investors from being able to invest? Why? It won’t make a difference when local investors will just end up scooping up whatever the foreigners would have bought.

        This is about whether foreign nationals who do not live in Australia should be allowed to buy property

        I probably should have used the word ethnicity. Either way, if someone has money, why should they be stopped from buying whatever they want to buy? Maybe that would make sense if someone was going to control an entire market (e.g. monopoly) but that’s not the case here.

        Should Elon Musk not be allowed to buy Twitter because he has the money? If Australians really cared, the ones selling should sell to local buyers even if they’re offered more from foreign buyers. Blame the sellers.

        • pais on 03/01/2023 - 13:03

          So should we ban foreign investors from being able to invest? Why? It won’t make a difference when local investors will just end up scooping up whatever the foreigners would have bought.

          You're very close to the conclusion, but not quite - Yes, of course local investors (I include owner occupiers in this) will scoop the property up… at a cheaper price. Did you miss the question in the OP?

          • Ghost47 on 03/01/2023 - 13:36

            @pais: It will hardly be any cheaper. Demand will never die especially since immigration floodgates are open again, and local investors know that already.

            Prices will simply keep going up, it’s the Australian way.

            • pais on 03/01/2023 - 17:36

              @Ghost47: Close again but not really the cigar - Nobody posits they’ll go down on this basis alone, however it is another upward pressure being removed. In relative terms this may simply mean prices don’t increase at the same rate. This isn’t a quibble, it’s a reasonable policy objective.

              Whether Australia is some special snowflake where “bUt ReAl EsTaTe AlWaYs GoEs Up” can hold true indefinitely bucking the trend seen in other housing bubbles throughout history the world over is another matter seperate to foreign investment alone.

    • AustriaBargain on 03/01/2023 - 03:28
      +16

      Australia's property market is over four times our GDP, how does that make any sense? We are investing in the wrong thing. Housing market doesn't increase our productivity, it doesn't support tech or science, it doesn't make things to export. It just makes a fraction of the population richer.

      • Ghost47 on 03/01/2023 - 16:45
        +3

        It doesn’t make sense. But that’s Straya for you. People want to get rich doing nothing except investing in property. That’s the culture here, and it’s pervasive. We are too stupid as a nation to think “oh maybe the sharemarket is another way to invest” even though everyone who has a super account basically invests in the markets.

      • CowFrogHorse on 03/01/2023 - 17:05

        Theres no productivity in people commuting for hours every day either…and yet most Australians waste 1/3 of their working week "commuting" just because.

    • ForkSnorter on 03/01/2023 - 09:02
      +4

      we are a capitalist society

      Australia, like most democratic countries around the world, is a mixture of capitalism and socialism.

      Canada, like most democratic countries around the world, is a mixture of capitalism and socialism.

    • RefusdClassification on 03/01/2023 - 13:30

      There are a lot of things even citizens cannot simply buy is this capitalist nanny state: cannabis, other psychoactives, body armour, savannah cats, vapes, fireworks, firearms, poisons, toilets with a large water volume, 100% alcohol (ethanol), suicide devices, pornography, and so on.

      Capitalism is just a synonym for totalitarianism.

  • morse on 03/01/2023 - 00:39
    +3

    Not completely opposed but to the idea, though it would take a while for it to have an impact as presumably it’s not retrospective. Also it depends if the goal is cheaper purchase prices or cheaper rents. Many foreign owners will be renting properties out, so this initiative might make things harder for renters. I also think permanent residents or those living and working in Australia with certain visas should also be able buy (i.e not just citizens).

    I have greater concerns about foreign ownership of core industries and agricultural land. Seperate issue though.

    • Minimum chips on 03/01/2023 - 20:39
      +1

      An excellent point about them renting the property out. We are talking about investors - they are trying to make money and having the property empty isn't a good way of doing that. There are cases where it happens because the perceived risk to their investment is high and they are achieving a reward somehow regardless, but I can't see how it would be common.

      Shifting supply from one set of hands to another is not going to do much to actual supply in the market, which is something people assume for some reason.

  • AustriaBargain on 03/01/2023 - 03:25

    It won't make much of a difference at this point, but it's a start. And it was an election promise iirc. As Trudoe says, homes should be for people not for investors. Japan more than solved their housing investment problem, so much so that they saw big vacancy rates. For regular people who just need somewhere to live that's a good problem to have.

  • CheapandUsed on 03/01/2023 - 06:39
    +11

    I suspect that if the government finally put Anti-money laundering/know your client (aml/kyc) rules for all housing transactions we would see a decent drop in house prices.

    Having to prove your funds are legit rather than just a suitcase full of cash
    May be a good start.

  • tomleonhart on 03/01/2023 - 07:14
    +10

    This is a question for someone who is more knowledgeable on this topic than me to please answer:

    If foreigners were the main reason for unaffordable housing, how could 2021 see the most ludacris increase in house price while net migration was negative 84000?

    Everything I see point to cheap interest rate as the result of high house price rather than immigration.

    • Bangers on 03/01/2023 - 10:40

      Exactly - also these demand drivers like immigration and population growth are rather static and don't fluctuate year to year that greatly (except for recently with COVID).

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