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.