THERE are different views about whether allowing foreign investors to buy property in Western Australia is a benefit or not.
On one hand the Australian Affordable Housing Party, which was only registered earlier this month, said opening up the nation’s housing market to foreign investors was one of the reasons Australians were now living with some of the most unaffordable housing in the world.
On the other hand the Property Council of Australia WA said calls for a foreign vacancy tax in Western Australia were misguided and if implemented would stifle economic growth.
The Australian Affordable Housing Party’s website said the nation’s weak enforcement of its laws governing overseas investors buying property in Australia was helping drive up house prices.
“Even just temporary residents are allowed to buy property in Australia and there is no checking that they sell those properties when they leave,’’ the website said.
“There is also no requirement for real estate agents to check that purchasers are legally entitled to buy in Australia and only a fraction of these illegal sales are later discovered by the Foreign Investment Review Board.
“At the same time domestic issues are driving capital flight out of mainland China which has seen many ordinary Chinese people choose Australia as a safe place to park their money in real estate in case the Chinese government clamps down on their banks.
“Many of these buyers do not want the trouble of managing a rental property remotely and do not get tenants in so the property will be in pristine condition when it is sold again.
“This is not unique to Australia – the same phenomenon has been observed in Vancouver, Hong Kong and other major cities where mainland Chinese investors have bought in large numbers.
The website said the 2016 Census suggested there may be as many as 300,000 of these deliberately vacant investor owned properties across Australia.
“If these properties were made available to renters there would be a significant drop in rents and house prices in Australia.
“But as things stand, these unavailable properties create an artificial scarcity of housing for renters and buyers which pushes prices up even higher.’’
But Property Council of Australia WA executive director Lino Iacomella said WA had the second lowest number of foreign investors in the country, second only to Darwin.
“Any tax on foreign investors will not produce a significant amount of revenue and will encourage investors to look elsewhere,’’ he said.
Mr Iacomella said the McGowan Government had a responsibility to drive WA’s economic recovery and introducing prejudiced and inefficient taxes would only encourage investors to take their money elsewhere to the detriment of all West Australians.
“There is no denying that the property market is weak and residential vacancy rates are high, but placing an extra tax burden on foreign investors will do nothing to drive the economy or reduce vacancies,” he said.
“In fact, most vacant investment properties are owned by West Australians.
“Introducing an inefficient tax will only deter much-needed investment in the state.
“As the property market booms in Sydney and Melbourne the WA government must do everything it can to incentivise both domestic and foreign investment in WA.
“The introduction of a vacancy tax will not only be a broken election promise of no new taxes, but will also undermine the government’s commitment to improving Asian engagement with WA.
“Implementing an additional tax during a weak market, makes no economic sense and has the potential to worsen WA’s financial standing.’’