Foreign investment in Australia’s residential property market has slumped to a five-year low, with real estate bodies calling for changes to the proposed legislation.
Hefty fees associated with the overseas purchase of residential properties has led to a downturn in activity, with applications down to 7,500 last year from 40,000 in 2015-2016.
The Real Estate Institute of Australia (REIA) has come out in opposition of the current bill, and believes that associated costs for foreign investors purchasing residential property should cover the assessment and administration process and nothing more.
REIA President, Adrian Kelly, said: “Foreign investment in the residential property market is the lowest it has been since 2015 – 2016.”
“We understand from our agents working in this area that the cumulative impact of Commonwealth and State government fees has contributed to decreased demand from foreign investors,” said Mr Kelly.
It has been our proposal to Treasury, and now this Committee, that fees should be equitable and simply reflect the cost of assessment and processing by FIRB.REIA President – Adrian Kelly
In the aftermath of COVID-19, Australian governments have made a conscious effort to become more business and investment-friendly, though Mr Kelly feels that this has not been reflected in relation to foreign investors looking to purchase residential properties.
“This is not just across the board but for each category of fees. That is, residential property applications should not be offsetting or subsidising the cost of administration other categories,” he said.
Currently, the purchase of a residential property valued at $5 million by an overseas buyer would incur fees of $52,800, whereas a non-residential asset would have to be valued at $210 million to command the same fee.
“In short, unnecessary impediments should be removed for foreign investors looking to invest in Australia’s residential property market,” said Mr Kelly.
“We respect all national security considerations but fees should ultimately reflect the cost of undertaking the assessment and administration.”REIA President – Adrian Kelly