Federal Government Treasurer’s new measures for illegal foreign property purchases

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Australian Federal Government Treasurer Joe Hockey announces proposed new measures to crackdown on illegal foreign property purchases.

Today 8 August 2015, Joe Hockey Federal Government Treasurer, announced that the law will be changed so that foreign investors breaking the law and purchasing established properties (instead of new properties) will be forced to forfeit capital gains on the property and will be fined 25% of the purchase price or 25% of the property value. Temporary residents can still purchase existing properties to live in whilst they are residing in Australia so long as they sell the property if they permanently depart Australia.
There is currently a moratorium on criminal charges for foreign investors self reporting that they have broken the rules. However, those that have broken the rules will still be required to sell the properties.
It has been reported that 400 Australian properties are under investigation for being illegally purchased by foreigners. However, it is acknowledged that the vast majority of (Chinese) foreign property investors are complying with the Foreign Investment Rules.
The rules on foreigners purchasing Australian property are quite simple and easy to comply with. Non-residents must obtain approval from the Foreign Investment Review Board (FIRB) and generally can only purchase new properties. If they are a temporary resident they may be able to purchase an existing property to live in whilst that reside in Australia. The Foreign Investment Review Board may grant permission to purchase existing property for the purpose of redevelopment to increase the supply of property. However, it is unlikely that the existing property will be able to be rented out / leased whilst it is waiting to be re-developed.
The Government has already announced that it is introducing a new fee/tax for foreigners applying to purchase property in Australia. However, this is not expected to reduce demand from foreigners for Australian property.

Non-residents can borrow to purchase property in Australia

Did you know that some banks will lend to non-residents to purchase property in Australia? Find out more about mortgages for non-residents here:

Non-resident mortgages

Are you a property developer?

The Government is encouraging new dwelling supply. Ask us about your property development finance options. Non-resident can also borrow from Australian lenders to for development projects. The criteria have become stricter for both non-residents and Australian residents. Find about property development finance here:

Property development finance

Are you a temporary resident?

Did you know that temporary residents like 457 visa holders can borrow to buy property in Australia? Find out about home loans for 457 visa holders here:

Home loans for 457 visa holders

Chinese mortgage brokers

Do you want to compare your finance options and need Chinese language support? Contact one of our Chinese mortgage brokers!

Chinese mortgage broker

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Australian property market 2015 forecast

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Australian property market 2015 forecast: Good news for borrowers and real estate owners

The reserve bank of Australia may not have cut the cash rate today but another 0.25% rate cut before the end of the year appears likely if not inevitable. This is good news for borrowers and other factors also make for good news for property owners as prices set to continue to grow over coming years.

Why interest rates are likely to remain low or get lower in the near future

Considerations by the Reserve Bank of Australia in reviewing and setting the cash rate included:

• fluctuations in the economic conditions in Greece and China;
• below average growth in the Australian economy;
• inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate;
• elevated but unchanged unemployment; and
• the need to depreciate the Australian dollar (higher interest rates encourages buy and appreciation of the Australian dollar)

It is reported that a cut to the cash rate at this stage may ‘spook’ consumer confidence. It is also likely that the reserve bank board knows that a cut is needed but would rather postpone it so that in future if more stimulus is needed there is still some rate left to cut.

Why real estate prices are likely grow

Real estate prices are linked to interest rates to a large extent as most people know. So the current (low) interest rates are already stimulating the housing market. If there is a further cut, which is likely, then this will stimulate the housing market even more!
But there are other factors that will compound price growth in the Australian property market. However, these are not as broad based as a rate cut.
Australia’s two largest cities have already had property price gains but now, according to SQM research, the amount of housing stock on the market  has plummeted. In Sydney, the housing stock on the market has dropped  15.7% compared to june last year and in Melbourne the housing stock on the market has dropped a massive 20.2% compared to this time last year! With less properties available for purchase buyers will need to fight harder (and pay more) for properties in these two markets.

Australian population growth is creating demand for housing

With Australia’s population growth one of the fastest in the developed world the demand for housing in on the increase. Sydney is Australia’s largest city, Melbourne is Australia’s second largest city and is forecast by the Australian Bureau of Statistics to grow at a faster rate and will become Australia’s biggest city (population wise). Large populated cities tend to have high demand and high property prices as more and more people compete to purchase. This is not new but since it is such a driving force in the property market it needs to be mentioned.

Massive investment from overseas investors in Australian property

In addition to migrants, investment from overseas buyers is helping the property market grow. China with millions of millionaires have become Australia’s largest foreign investors in Australian real estate and are forecast to invest billions more over the next seven years. Some of these will be immigrants or parents of immigrants others just investors. These property buyers are buying in Australia’s largest cities and tend to focus on areas where there are already a large number of Chinese residents. Glen and Mount Waverley in Melbourne are excellent examples of that. These suburbs are popular among Chinese buyers. This has led to Mount Waverley becoming Melbourne’s highest growth suburb. These and other Chinese hot spots are likely be growth hot spots into the future.
As mentioned by the Reserve Bank of Australia there are some economic woes in China with the Chinese stock market showing a crash of sorts in recent times. This will only serve as an incentive for more wealth Chinese to diversify their investment offshore and with their love of real estate and proximity to Australia, the market here is sure to benefit.

Impact of the Australian dollar on property prices

Another factor fueling the Australian property market is a cheap Australian dollar, which the Reserve Bank of Australia only wants to be cheaper. When the dollar is cheaper our exports become cheaper and we can sell more of them. But our properties also become comparatively cheaper and foreigners can afford to spend more and again pushing up prices.

Need to know how much you can borrow? Contact an Oak Laurel mortgage broker:

Mortgage broker in Adelaide

Mortgage broker in Brisbane

Mortgage broker in Melbourne

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Mortgage broker in Sydney

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Chinese property investors predicted to invest billions more in Australian real estate 2015

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Chinese buyers are forecast to invest $ billions in Australian property 2015

Chinese property investment in Australia estimated to reach AUD $44 billion over the next seven years

A report by global investment bank Credit Suisse predicts that Chinese nationals will continue to invest in Australian real estate. It is estimated that Chinese investment in Australia property will be approx AUD$44 billion over the next seven (7) years.

When forecasting expected Chinese residential property investment, the analysis combined information from the Foreign Investment Review Board, Department of Immigration and Bureau of Statistics . The bank’s conservative estimate is that Chinese will invest $5 billion per annum into the future.

The Credit Suisse analysis estimated that newly arrived Australian immigrants and foreign Chinese investors have already spent about $24 billion on Australian property over the past seven years. Foreigners (including Foreign Chinese) are required to purchase new properties, taking this into account the report estimates that about 12% of all new properties in Australia are purchased by foreign Chinese buyers.

Where are Chinese property investors buying property?

The  report suggests that the majority of Chinese property buying is occurring in Australia’s two largest cities, Sydney and Melbourne. Within Sydney and Melbourne certain suburbs are Chinese buyer hotspots such as in and around Glen Waverley in Melbourne. It is estimated that 18 per cent of all new properties in Sydney and 14 per cent in Melbourne are being purchased by foreign Chinese nationals. The amount of new property bought by foreign Chinese in other Australian cities was estimated at a much lower level (7%).

Is Chinese investors buying in Australia good for other Australian property investors and homeowners

The continued demand from Chinese property investors for Australian property is good news for homeowners, property investors and property developers as demand for Australian property, particularly new property is set to remain strong and result in sustained capital gains. However, on the contrary, this may be bad news for those yet to enter the Australian property market as prices are likely to rise quicker than many can save for a deposit.
Are you a first home buyer and want to enter the property market with a low deposit or no deposit? If you have family that would like to help you and who already own property that has increased in value since they bought it, you may also be able to get a guarantor home loan without having a deposit. Low deposit home loans are available where you can borrow up to 95% of the property value without a guarantor.
Guarantor home loans

Are you a property investor or about to buy your first investment property? With the already high demand for Australian property (as a result of population grow) increasing due to foreign demand you may want to invest in Australia property. Find out more about borrowing to invest in property.
Investment property loans

Are you Chinese, looking for a home loan and want to speak to a Chinese mortgage broker?

If you are Chinese and need assistance from a Chinese mortgage broker, we have Chinese mortgage brokers that can help you. Our Chinese mortgage brokers can assess and compare home loan options for you so that that you don’t pay too much. If you are a Chinese property investor, our Chinese mortgage brokers can help you to find home loans that suit property investment and structure your investment home loans correctly to save you money and increase your flexibility. Ask us about home loans for Chinese property investors and consult with a Chinese mortgage broker.

Chinese mortgage brokers

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Renting gets more expensive in Melbourne in 2015

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Rent prices are on the increase in Melbourne, Victoria in 2015

With rent prices increasing in Melbourne, the rental market has never been tougher for tenants. Melbourne’s rent prices have reached an all-time high in 2015.
According to the Domain Group’s recently released rental report, the median asking rent for houses in Melbourne, Victoria increased to $390 per week, an increase of 2.5 per cent over the March quarter. The report also found that unit rents increased to $365 per week, an increase of 1.4 per cent over the March quarter. These increases are thought to be as a result of strong population growth in Melbourne that has not only been pushing up rent prices but also pushing up real estate prices. The rental increases come despite Melbourne having a unit vacancy rate of 2.8 per cent and a house vacancy rate of 1.9 per cent.
Melbourne is not the only Australian city to be experiencing increasing rent prices in 2015. Sydney is also seeing rents get more expensive, on the back of property capital gains.  The median rent in the Sydney in the 2015 March quarter for houses was $520 a week and for units $500 a week.
These increases in rental prices may result in further interest by renter and investors alike in purchasing property in Melbourne, which is already showing good property capital growth.
There is concern for first home buyers due to the increased rents reducing disposable income and making it more difficult to to save a deposit for the purchase of their first home. This comes on top of what is already a difficult market to enter due to higher and rising property prices. It is also expected that the rental price increase will lead to higher demand for low deposit home loans and family assisted first home buying (such as guarantor home loans). However, rental price increases are good news for property investors in Melbourne as increases to rents also help to cover the interest payments on investment properties.
Are you interest in a guarantor home loan? Find out more information about guarantor home loans here:
Guarantor home loans

Maybe you want to buy an investment property. Find out about investment property loans here:
Investment property loans

Or you can contact one of our mortgage brokers in Melbourne, Sydney or wherever you are to assist you with your finance.

Mortgage brokers in Adelaide

Mortgage brokers in Brisbane

Mortgage brokers in Canberra

Mortgage brokers in Melbourne

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Mortgage brokers in Sydney


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Homes for new Australian

Population growth and Australian property

With the Australian population growing at one of the highest rates in the developed world the demand for housing has been and remains strong.

Where are all these new Australian people going?

The majority of people coming to Australia are moving to the State capital cities but primarily Melbourne followed by Sydney. Within the capital cities people and not just new people but generally people want to live in the inner city area or middle ring area. This is because in Australia the State capitals (especially Melbourne and Sydney) are the places where the jobs are and within these cities the inner city is where the high paying jobs are and thus living around these areas is convenient and prefered by high income earners. People looking to to invest in Australian real estate either to live in or rent out (as the capital gain is where the money is made from Australian property), they may want to purchase in the inner and middle ring. There are still bargains to be found in some suburbs like Maidstone in the west inner city and Notting Hill in the east middle ring. These areas are also favored by new Australians.

Resources

www.propertyinfo.info

www.realestate.com.au