Australia forced sale of 25 homes with China buyers

Chinese owned almost half of properties found to have broken foreign investment rules since 2015

PUBLISHED : Wednesday, 08 February, 2017, 9:03am
UPDATED : Wednesday, 08 February, 2017, 9:03am

Australia has forced the sale of properties worth more than A$107 million (HK$631 million) purchased by overseas buyers for breaching its laws since 2015 , and 40 per cent of the properties belonged to wealthy Chinese.

In a statement from Treasurer Scott Morrison on Tuesday, the Australian government listed 15 properties that it found did not meet the country’s rule on foreign investment, bringing the total number of homes forced to be sold to 61 – 25 of which had been originally bought by Chinese.

Australian law doesn’t allow foreigners to invest in secondhand homes. For new homes, foreign buyers have to get approval from the country’s foreign investment review board.

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The crackdown, which was initiated in early 2015 when prime minister Tony Abbot was in office, was partly a response to the bloating property market, with surging home prices that many locals blamed on a property shopping spree led by Chinese investors.

In Sydney and Melbourne, the country’s two biggest cities, home prices have increased by more than half since 2009, according to Australian government statistics.

In 2015, China overtook the US as the largest source of foreign investment in Australia, largely driven by spending on real estate.

“While we recognise the benefits that foreign investment can provide for Australia, we must also ensure that such investment benefits all Australians, conforms to our rules and is not contrary to our national interest,” Morrison said.

However, a working paper published in December by the Treasury said foreign buyers contributed very little to the fast growth of residential property prices in Australia, and that domestic factors such as interest rates and population growth had played bigger roles.

The most expensive property the government has so far put on the market is a 16,000 sq ft mansion that Xu Jiayin, chairman of China’s development goliath Evergrande Group, purchased for A$39 million in 2014.

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According to the latest Forbes’ magazine ranking, Xu has a net worth of US$9.8 billion, making him the ninth-richest tycoon on the mainland.

The mansion, located on scenic Point Piper in eastern Sydney, was sold to a Chinese-Australian shortly after the government ordered Xu to sell the property within 90 days or face prosecution in March 2015, according to a report from The Daily Telegraph.

In the meantime, the Chinese buying spree in Australia has started to wane since the authorities in Beijing began tightening capital outflows last year and made it harder for people to invest in overseas properties. They are on a list of investments that Beijing has deemed “irrational”.