Young foreign students on visas, with no income and who have purchased $5 million properties are just some of the 500 potentially illegal foreign real estate transactions currently under investigation by the Australian government. Federal Treasurer, Joe Hockey, today provided an update of the operations from the 50 strong task-force, flanked by ATO commissioner Chris Jordan. Mr Jordan indicated many of the investigations surround student owners.
As we have previously reported (Illegal foreign buyers on notice, 6 homes purchased illegally to be sold, a further 462 under investigation), a new task force has been set up to investigate and prosecute those undertaking and assisting with illegal residential property transactions.
In Australia, it is illegal for foreigners to purchase existing property. They can, however, purchase new property in a move designed to increase housing stock.
Hockey said the “The purchase prices of the properties range in value from $265,000 to $8.1 million.”
He has issued another five divestment orders, bringing the total to twelve.
“They now have 12 months to sell the properties, rather than the normal three month period, and will not be referred for criminal prosecution.” remarked Hockey. Illegal buyers have an amnesty until the end of November.
Illegal transactions are thought to be driving a surge in house prices in Sydney and Melbourne – area’s preferred by the Chinese while potentially undermining the banking sector and economic stability. Both Sydney and Melbourne residential property markets are widely considered to be in a bubble.
APRA Chairman Wayne Byres, in a speech today indicated he was happy with the big bank’s progress on recapitalising and strengthening their balance sheets saying, “risk-based capital ratios are as high as they have ever been.”
Last year, the banking regulator found Australia’s big banks would be rather vulnerable from a housing crash (‘Have the Big 4 just flunked APRA’s stress test?‘) and ordered them to increase capital.
Commonwealth Bank has been the latest bank to finish a capital raising. It has successfully raised $5.1 billion despite last Friday announcing its retail entitlement offer fell short $1.5 billion as investors start to turn their backs on the banks.
» STUDENTS IN $5 MILLION PADS: The probe on foreign home owners is now a billion-dollar project – Business Insider, 16th September 2015.
» Foreign buyers’ probe nets 500 properties worth $1b – The Australian Financial Review, 16th September 2015.
» APRA satisfied by multi-billion-dollar bank capital raisings – The ABC, 16th September 2015.
» Commonwealth Bank retail offer falls short by half – The Australian, 11th September 2015.
As usual too little too late. The money taps have been turned off in China due to their downturn, consequently sales last month in Oz markets are down 70 to 80%. With the FIRB approving $27.7billion of total investment any loss of investments will severely shake the RE markets of Melb & Syd. Could it be the start of the BIG deflation?
Young foreign students on visas, with no income and who have purchased $5 million “properties”
ha ha ha Australia the land of opportunity…esspecially if you want to have a go, as our bureaucrats are the world leaders when it comes to creating legal loopholes.
I’ll be waiting until they actually force them to divest before I regain my faith in the government. Steps in the right direction though, but this is all only happening after the Chinese government is stopping capital outflows themselves…
I published a recent article on how the Chinese and other foreigners have been used as an excuse to justify inflated prices on everything from iron ore, coal, uranium and copper to bitcoin to property in recent years. Everybody’s favorite New Paradigm.
I hate fake-artists who try to make out they’re doing something whilst knowing full well they’re not actually doing anything. Hockey won’t address the real issue of Negative Gearing and local scamming because that would affect him. He reminds me of Eddie Murphy in Trading Places (something Hockey will be doing soon lol):
Hockey must go-this economically incompetent and corrupt despot deliberately allowed this situation to get out of control. It is too little too late-Hockey must go
Yippeee !! We are going to get FREE MONEY according to Macquarie Bank. As bank bailouts only go to the 1% and blow asset bubbles for the rich, the next insane plan is to pump the money directly into the economy. This is definitely plan Z of a desperate elite that can see the endgame and their own demise if they don’t fix their mistakes and cover their corruption. Bring on the helicopters full of worthless dollars so we can all emigrate with our pockets crammed with cash and escape the chaos that will follow.
Dr. John Lee. Professor Sydney University: “Not surprisingly,over two-thirds of board members,and three-quarters of senior executives of SOE’s are either CCP officials or members. The problem with this state-led approach is that entrepreneurs and other businesspeople need the support of the Party,or better still CCP membership to get ahead.This means that the country is divided into a relatively small group of well-connected insiders benefiting disproportionately while over a billion people have little prospect of sharing in the fruits of the country’s economic growth. Since the rise of the corporate state,China has gone from being the most to the least equal society in all of Asia in terms of wealth distribution. Inequality in China is worse than India,the U.S. and Brazil. It’s no wonder that there are now 85 million card-carrying CCP members with another 80 to 100 million on the waiting list to join.”
With Australians having almost $1.5 Trillion in RMBS, $1b under investigation is nothing.
There’s no silver bullet for this market, it’s a complex disaster.
Coles supermarkets are now selling Landlord Insurance.
God help us.
Now that the tentacles of the Vampire Squid of finance (Goldman Sachs) are firmly in The Lodge it seems ludicrous to think that this government will save our fast sinking economy. The trickle down theory of corporate economics is turning into “Pee on the poor” with a proposed wider/larger GST tax base and smaller company tax. Add to this Carbon Trading aka: Enormous commissions for global banks and it starts to look grim for the average Joe. The same formula was used for Greece ie Install Goldman Sachs PM (Lucas Papademos) increase the debt, followed by austerity and asset stripping of the country. Game over.
The number I hear bandied around is the Earth is around 40 trillion in debt. People ask “Who did we borrow from?”, to which the answer is – the future.
I’m really at a lose as to what a good way is to protect oneself too. The price of everything of value is so ridiculously inflated.
I wish the government would stop getting distracted by the minority of home buyers – the Chinese foreign buyers. They didn’t get us into this mess, WE did. Over 50% of home buyers are local investors in today’s market, that’s not only insane but a relatively recent phenomenon. Baby boomers – stop buying the next generation’s family home!
I hope this crash is hard and painful.
@Chockolate, it’s going to be all about Wealth Preservation not Wealth Creation for the next decade. Am going to be writing an article about this soon.
Meanwhile, the tax reform Australia needed might just be about to happen. Based on the article below, the government wants to tap the Australian Asset bubble to pump money into innovation and other more productive endeavours. Will it be trading a housing bubble for a dotcom bubble, hopefully a nice spot in between.
Here’s what you should do with your $60,000 salary:
1. Live in absolute poverty for a decade in order to save a deposit.
2. Borrow $800,000 from the bank to buy a one-bedroom apartment in Sydney with no balcony and no car park.
3. Spend the next 50 years trying to pay it off.
4. If you get sick of sitting inside your tiny box of an apartment, you could wander outside and look at the cars on the road.
5. You won’t be able to afford to do anything for 50 years due to the size of your mortgage, but public libraries are free, so when you need some excitement, you could wander down to the library and browse the shelves.
right-wing-moron-Spot on. We should not forget to thank the voter especially. After all they put these same people who are responsible for all this mess into power. We badly need an economic correction(price drops) People and especially the suits and ties will say this will cause unemployment. When a society lives on the accumulation of debt to fuel an economic boom we are already doomed to suffer unemployment. This is false economic growth. The media and rent an opinion economists have brainwashed us to believe debt means jobs. We are conditioned to believe that a minimum wage of $657 gross is good for Australia and that we are greedy to ask for more but when house prices go through the roof then that is good for all Australians. Cronyism, nepotism, despotism have filled most levels of all governments. There is no transparency in the selection of political candidates and especially political party donations. The list can go on forever. We have become a third world country and we are ranked behind Russia and Thailand in corruption levels. As I stated before, we have plenty to thank the voter.
Why blame the voter when the system is at fault. We have become an Aristocracy of wealth and it makes no difference who is in power the result will always be the same. The corporates/bankers control the economy and the US dictates foreign policy. Until we get rid of the central bank, reinstate sound money, stop political donations and refuse to bomb foreign countries for no reason …… nothing will change
Morpheus is correct, the system itself is failing. Now that big money is influencing politics we see the effectiveness of democracy greatly reduced.
My view is not entirely pessimistic: we need to do to politics what Uber is doing to taxis. The whole system is archaic and could largely be automated away to removed the dependency on liars and thieves. That way if big money wants to buy votes, they have to bribe everyone and not just a room full of charlatans.
Just a matter of time.
@Morpheus-Correct-the system is at fault and the system is tolerated by who?-the voter. I rest my case.
PS-Our money system should go back to the gold standard-We should live with what we earn. Credit should only be available for major purchases(house, car) The tax system should be scrapped and shifted to a land tax based on the value of the land. Scrap government subsidies for all but most essential services. Re-introduce a government bank. Get rid of local councils. There are plenty more solutions but the voter will not stand for it.
@ THEO, We agree on the changes needed but apart from grabbing pitchforks and flares how do you suggest the voter changes the system if voting has no effect? People power stopped the Vietnam War but what will it take to overturn all the vested interests, monopolies and fraud this time. The money/ruling class knows a population hamstrung by overwhelming debt cannot change the system. Perhaps like neo-hippies WE have to opt out of the matrix.
@ S (comment 13) I get tired of hearing this baby boomer shaming nonsense. Sure BBs bought investment properties pre 2000 when they were still reasonably priced, but with the benefit of hindsight of historical prices, Im sure a lot of them held back too, especially in these current times of obscene prices. But plenty of Gen X bought in the noughties, and there’s plenty of Gen Y who to this day think and investment property is a good idea and trying to do it.
The elephant in the room is that most people are stupid and lazy. It has nothing to do with age or particular demographics.
@Theo Those same dumb people I talked about above are the same dumb voters you talk about. If Australians were politically conscious then they would perhaps be lobbying their local members of parliament much more, and we would be seeing regular demonstrations in the streets about all sorts of disgraceful govt decisions which have been made due to general mismanagement. Our elected leaders have no foresight and have lost the ability to implement long term strategies.
Anyone who thinks we have advanced beyond the feudal system is kidding themselves. CEOs, banks, and politicians are the overlords, and the taxpayers are the serfs. The way laws and policies are being introduced unchallenged in this country is a disgrace. I’m talking about economic policy, and well as civil rights.
The economy is being hollowed out with corporations max exiting to China, we are laboured with an ever growing and every more slowly grinding bureaucracy, and having more of our civil rights eroded for the most insignificant reasons.
Australians are REALLY apathetic, and only have themselves to blame.
@Morpheus-All we need is to change our priorities. Firstly, all of us being here and making a fuss is a good start. Secondly, we can also start by placing a list of complaints instead of voting into the ballot box.(3), for those who are on social media, they can list their complaints about politicians there.(4)For those who have to vote-pick another party other than the Labor/Liberal decades old monopoly. Give another party a chance to govern.(5)We can write and/or email politicians themselves http://www.aph.gov.au telling them that you will mention their progress or lack of it concerning issues on your social media sites.(6)We can personally communicate with TV and radio media to do more features about the actions of politicians. The purpose of all this is to change peoples priority and that is to place the social and economic welfare of the country above that of our personal pockets. Maybe then we stand a chance. These are just some ideas. Any other ideas are most welcomed.
Theo, why wait until we have an election before showing disgust and contempt for the current regime? When is the next election, anyway? I think the first thing is to make people realise they are being shafted.
The young people of today, for example, realise that they are being locked out of the housing market for a whole host of reasons but do not realise they have any power to change anything. And maybe they don’t have the power, especially when most of the population owns property, and are therefore happy with rising property prices.
Here’s lots of ideas from the Albert Einstein Institute detailing 198 Methods of Non-Violent Protest and Persuasion. Let me know when you start.
If you think your vote still counts read the following on the real reason why Tony Abbott was replaced by the Goldman Sachs sock puppet.
I like the link. Thanks for sharing.
@Morpheus-There are some more good and relevant tips to protest peacefully against corruption in all levels of government. In other areas like not paying bills as protest may somewhat discredit one’s cause. Hopefully other’s will read them and get their minds working and to wake up from their sleep of consumer consumption through easy credit and loans
As per usual, Zero Hedge delivers an astoundingly stupid story. Tony Abbott didn’t have evidence of fraud at the BoM. It was the standard science denier tactic of wasting time, tying up resources and attempting to fling mud.
Abbott is a mental midget. The voters came to understand that, and he had to go. Good riddance.
@ David C
Transparency in organisations like BoM is essential for them to gain the confidence of the public who pay for them. Zero Hedge used references from the Australian and the ABC. Please use non-subscription links so we can read your sources for ourselves.
This is huge.
Contagion has spread from mining towns to comparatively ‘healthy’ suburbs in the cities. Good luck finding a buyer who can stump up 30% in these suburbs.
Yes but Zero Hedge put on their tin foil hat and drew a very long bow. ABC reported the facts. Zero Hedge took that and made crap up to suit their right wing agenda.
Abbott got his tip of from that bastion of scientific inquiry – The Australian.
If you want to access the BS article go to Google, search for “Abbott BOM” and click on the link for Business Spectator.
This isn’t about Malcolm Turnbull it’s about Tony Abbott. Anyone with the exception of those two bozos Joe Hockey and Peter Dutton would be better.
Let’s face it, most facts can be distorted to a point based on the actual model and or the agenda of the argument which is either for or against. But one thing I know for sure from my own experience s if you can read between the lines then you will be a lot closer to the answer. Personally I can generally read between the lines….not aimed at anyone just a general comment. Read between the lines people most are full of shit.