I was aware that the rules changed in 2010 for foreigners buying into the Australian property market but wasn’t quite sure how it all worked.
This is the low-down direct from the Foreign Investment Review Board.
“Temporary residents may acquire one established dwelling only and it must be used as their residence in Australia. These applications are normally approved subject to the condition that:
- the property is vacant at settlement;
- the property is used as your principal place of residence;
- no part of the property is rented; and
- you sell the property when it ceases to be your principal place of residence (the earlier of when you no longer reside in the dwelling or you depart Australia.
Foreign non-residents or short term visa holders may invest in Australian real estate by acquiring new dwellings, off-the-plan properties under construction or yet to be built, or vacant land for development.
Foreign non-residents or short term visa holders cannot buy established (second-hand) dwellings unless it is for re-development.”
In 2012 overseas property investment in Australia amounted to $34.6 billion.
“Investment in residential properties made up $20.9 billion, a considerable increase from the two years prior, coinciding with changes in investment review guidelines. Foreign investors also poured another $6.9 billion into the development of residential properties around the country.
Top investing nations
Sharing over one third of the overall foreign property investment in Australia are the top three investing nations: the UK with $4.61 billion, China in second place with $4.093 billion, followed by the US, which invested $3.4 billion last year. Malaysian investors spent $1.86 billion, followed closely by the Netherlands, Germany and the United Arab Emirates.
China is the strongest growing investor, having purchased over $60 billion in Australian real estate since 2007. They are also Australia’s highest-spending tourist nation on luxury goods, holiday accommodation and travel. According to the Australia-China Business Council, Chinese trade and investment in 2010 generated $10,000 in income per Australian household – a considerable contribution to the Australian economy.
Leading apartment developer Meriton claims that two years ago Chinese investors made up 60% of the buyers in some of their developments. Underlying this growth is the fact that investment properties in China require extremely high deposits of up to 60% of purchase price, making investing in Australia rather attractive.
Chinese investors have historically favoured buying one and two bedroom apartments in cities like Sydney, Melbourne and Brisbane, where their children can attend top universities, and rentals realise a good return.”