Federal government plans to restrict foreign investors for new developments have come under fire from the head of one of Australia’s leading property agencies.
Mark Mendel, CEO of iBuyNew, has said that restricting foreign buyers from purchasing more than half of the dwellings in any new project would merely discourage offshore developers from doing business here.
The measure, which is tabled to be introduced in May’s budget, would waste taxpayers’ money and could have catastrophic economic effects, he said.
Foreign buyers already face a host of restrictions and fees when investing in Australia.
“Enough is enough,” he said. “The roll-on effect if this latest proposal is included in the May budget could be an economic disaster for Australia.”
“This is just a ploy from the government to make it look like they are doing something for first home buyers but it will just discourage offshore developers from investing in Australia.”
In fact, this restriction has already been artificially imposed by local banks that lend to developers, Mendel told Australian Broker
A forced restriction from the government could be the last straw which ends up causing foreign buyers to stop investing in Australian property, Mendel said.
“Excessive surcharges and further restrictions on foreign buyers could also lead to fewer international students coming to Australia as well as a slower population growth and a rise in unemployment.”
Mendel also questioned whether foreign buyers were really inflating prices as has been claimed by the likes of Mark Latham and others in the media.
“They are still the minority of buyers in the market. While there are multiple claims of foreigners pushing prices up, we regularly see locals pushing property prices up too,” he said.
When asked what the government should do to rectify housing affordability, Mendel said that the tactic of giving money to first home buyers had been tried for a decade.
“For now the government shouldn't change anything and let the market take its course. Throwing money at this stage of the property market is probably the wrong move today. For now with so much speculation on the movements in the property market, it would best be to take a wait and see approach before taking any action.”
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