<p>Investors may soon find themselves with fewer reasons to buy established property and more incentives to look towards the new apartment market.</p>

<p>Proposed changes to negative gearing and capital gains tax concessions would see new and off-the-plan apartments retain access to the tax benefits, while established properties would miss out, creating a clear advantage for buyers purchasing newly built housing.</p>

<p>The policy direction aligns with what many developers have been saying for several years. Australia needs more housing supply, and governments are increasingly looking for ways to encourage investment into new stock rather than existing homes.</p>

<p>The challenge for investors is that suitable product is becoming harder to find.</p>

<p>For much of the last decade, one-bedroom apartments were the cornerstone of investor demand. They offered a lower entry price, strong rental appeal, and were a common feature across most apartment developments.</p>

<p>Today, the development pipeline looks very different.</p>

<p>Across both New South Wales and South East Queensland, developers are increasingly targeting owner-occupiers and downsizers, delivering larger two, three and four-bedroom apartments in response to changing buyer preferences. While one-bedroom apartments still exist, they now form a much smaller portion of many new projects.</p>

<p>That shift has created a shortage of investor-friendly stock, particularly in well-located projects close to transport, employment hubs and lifestyle amenity.</p>

<p>At the same time, rising apartment prices have pushed many new developments beyond the reach of traditional investors. On the Gold Coast and across South East Queensland, it's becoming increasingly difficult to find new apartments priced around the $1 million mark, particularly those offering strong rental fundamentals and long-term growth prospects.</p>

<p>We've rounded up four new apartment developments where investors can still secure a foothold in the market for around $1 million or less.</p>

<h2 data-end="1140" data-start="844">Flourish Soleira</h2>

<h2>Priced from: $1.07 million</h2>

<p data-end="1140" data-start="844">Popular Palm Beach developer Sherpa is soon to officially launch its newest local apartment development, Flourish Soleira.</p>

<p data-end="1140" data-start="844">The one-bedroom apartments in the building were only offered to first home buyers rather than investors, and all of those have been snapped up. The two-bedroom apartments will start from $1.07 million, and the three-bedrooms, still a good investment given the popularity of Palm Beach for owner-occupiers, starting at $2,045,000.</p>

<p data-end="1140" data-start="844">&nbsp;</p>

<p data-end="1140" data-start="844">[smartcode_project:default project_id=150017 project_image_fid=370964]</p>

<p data-end="1140" data-start="844">Flourish Soliera will comprise 153 apartments across two buildings, connected by a skybridge, the first ever delivered in the suburb.</p>

<p data-end="1140" data-start="844">True to Sherpa's booming Flourish brand of apartment projects, Flourish Soleira will have extensive rooftop amenity across both buildings including a&nbsp;wellness centre with gym, work from home, yoga, pilates, a&nbsp;heated pool, private dining rooms, pizza oven and barbecues, basketball court, and golf simulator.</p>

<h2><strong>Corallo, Palm Beach</strong></h2>

<p><strong>Priced from: $841,500</strong></p>

<p>Nearby Flourish Soleira is Changfa Group's beachfront-inspired Corallo development. They still have some one-bedroom apartments remaining, priced from $841,500.</p>

<p>The 105-apartment project on Palm Beach Avenue is otherwise dominated by larger two and three-bedroom residences, many of which are aimed at owner-occupiers and downsizers.</p>

<p>[smartcode_project:default project_id=112194 project_image_fid=808]</p>

<p>For investors, the appeal lies in Palm Beach's continued transformation from a laid-back beachside suburb into one of the Gold Coast's most sought-after residential markets. Residents at Corallo will be within walking distance of Palm Beach's surf beaches, the recreational amenity of Tallebudgera Creek, and the increasingly popular collection of cafes, restaurants and boutique retailers along the suburb's central dining precinct.</p>

<h2><strong>Corner House, Stones Corner</strong></h2>

<h2><b>Priced from: $880,000</b></h2>

<p>One of only two Brisbane apartment developments to make the list with prices under $1 million is DeMartini Fletcher's Corner House development in Stones Corner.</p>

<p>One-bedroom apartments start from $880,000 within the 88-apartment development, providing investors with exposure to one of Brisbane's most established inner-south locations.</p>

<p>[smartcode_project:default project_id=149098 project_image_fid=330594]</p>

<p>Stones Corner has long been supported by strong tenant demand due to its proximity to major employment and education destinations. The suburb sits less than five kilometres from Brisbane's CBD and is within easy reach of the Princess Alexandra Hospital, Greenslopes Private Hospital, Queensland Children's Hospital and several university campuses.</p>

<p>The project's location within a walkable urban village environment, surrounded by retail, dining and public transport infrastructure, continues to attract both professionals and healthcare workers seeking accommodation close to work.</p>

<p><strong>Parkdrive Apartments, Chermside</strong></p>

<p><strong>Priced from: $749,000</strong></p>

<p>The most affordable apartments across Brisbane's new and off the plan market are in Chermside where developer AusDev is selling one-bedroom apartments from $749,000, and two-beds from $929,000, at its recently launched Parkdrive development.</p>

<p>The development is strategically positioned in one of Brisbane's largest employment and retail precincts, placing residents within easy walking distance of Westfield Chermside, The Prince Charles Hospital, St Vincent's Private Hospital Northside and the suburb's major bus interchange.</p>

<p>[smartcode_project:default project_id=152125 project_image_fid=363782]</p>

<p>Already under construction and scheduled for completion in early 2028, Parkdrive benefits from Chermside's ongoing evolution into Brisbane's northern metropolitan centre. The suburb continues to attract significant public and private investment, supporting population growth and underpinning long-term rental demand.</p>

<p>For investors focused on yield and tenant depth, the combination of healthcare, retail and transport infrastructure within close proximity provides a strong foundation for occupancy and rental performance.</p>


Joel Robinson

Investors to turn to new apartments after Federal Government changes spark hunt for Queensland's best $1 million apartments

<p>A mix of Gold Coast locals, fly-in, fly-out purchasers from Sydney and Melbourne, and Brisbane-based families has driven early sales success at Broadbeach's newest apartment tower, Lumara.</p>

<p>The 26-level project, a joint venture between builder-developer 5Point Projects and Bourke Projects, comprises just 37 luxury residences and is attracting a buyer profile that is looking for exclusivity, above the most amenity-rich suburb on the Gold Coast.</p>

<p>[smartcode_project:default project_id=150454 project_image_fid=364156]</p>

<p>Jamie Bourke, Director of Bourke Projects, says every buyer secured so far intends to use Lumara as a lock-up-and-leave residence, combining holiday use with the ability to work remotely when required.</p>

<p>“The size of the apartments, both half- and full-floor options, and the different zones within the floorplans, lends itself perfectly to dedicated home office setups and multi-generational family holidays,” Bourke says.</p>

<p>That flexibility has become a key drawcard for affluent buyers seeking a second residence on the Gold Coast without sacrificing the ability to conduct business away from their primary home base.</p>

<p>The absence of holiday letting within the building has also resonated strongly with purchasers.</p>

<p>“This type of buyer doesn't need to generate holiday rental income,” Bourke says. “They're paying for exclusivity, privacy and certainty around who their neighbours are.”</p>

<p>[smartcode_project:default project_id=150454 project_image_fid=366491]</p>

<p>The strong demand comes amid broader shifts in the high-end apartment market following the Federal Budget announcements in May.</p>

<p>“We were already seeing strong enquiry from high-net-worth buyers, but that has only accelerated since the policy changes,” Bourke says.</p>

<p>“A lot of those buyers are looking to place more capital into premium lifestyle assets rather than investment-grade stock that has been targeted by the Federal Government.”</p>

<p>[smartcode_project:default project_id=150454 project_image_fid=366486]</p>

<p>Designed by Cottee Parker, Lumara adopts a slender, sculpted form with an emphasis on natural materials suited to its beachfront setting. The architectural approach draws on coastal influences, with a palette of stone, timber and concrete selected for durability and the ability to weather over time.</p>

<p>Apartments are limited to three and four-bedroom configurations, with a maximum of two residences per floor through the mid-levels and a selection of full-floor and dual-level homes in the upper levels. All apartments are oriented to the north to maximise natural light, cross-ventilation and views across the ocean, city skyline and hinterland.</p>

<p>A two-level amenity offering is positioned high within the building on levels 20 and 21, conceived as a sky wellness retreat. Facilities include a magnesium pool, spa, sauna and steam rooms, alongside more social spaces such as a private dining room, resident lounge, workspaces and outdoor barbecue areas integrated with landscaped greenery.</p>

<p>The uppermost levels are reserved for larger-format residences, including several full-floor homes and a dual-level penthouse with its own private wellness features and recreational spaces.</p>

<p>&nbsp;</p>

<p>To give buyers confidence, 5Point and Bourke commenced construction ahead of the apartments launching to the market, a sure-fire way to prove they mean business, and the building will be delivered. They are targeting a 2028 completion date.</p>

<p>[smartcode_project_cta:default project_id=150454]</p>


Locals, interstate holiday makers, drive early sales at Lumara, Broadbeach's newest luxury apartment tower

<p>Often when it comes to purchasing property, the biggest barrier to entry is the deposit. Buyers of established homes typically aim for a 20 per cent deposit to avoid the added cost of Lenders Mortgage Insurance, while most property transactions require around a 10 per cent deposit when contracts are exchanged.</p>

<p>The off-the-plan market works differently, with buyers typically paying a deposit during construction and settling the balance upon completion. As completion approaches at <a href="https://www.apartments.com.au/new-apartments/fabbrica-fitzroy-369-gore-street-fitzroy-vic-3065">Fabbrica Fitzroy</a>, developer <a href="https://www.apartments.com.au/developers/pace-development-group">Pace</a> is making it easier for buyers to secure a residence through a deposit-matching incentive. Purchasers need only contribute a five per cent deposit*, with Pace matching the remaining five per cent.</p>

<p>The offer comes as Pace unveils a completed display apartment and townhouse, now available for inspection by appointment ahead of the project's Spring completion.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371009]</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/winwood-mckenzie-architecture">Winwood Mckenzie</a> and landscaping by <a href="https://www.apartments.com.au/landscape-architect/acre">Acre</a>, Fabbrica draws on Fitzroy’s industrial and manufacturing history, incorporating references to the former Argyle Shirt Factory and Life Savers Confectionery Company that once occupied the site.</p>

<p>The development comprises 85 residences, spanning low-maintenance apartments through to larger-format townhouses with private street access and double lock-up garages, a relatively uncommon offering in Fitzroy’s higher-density apartment market.</p>

<p>Pace says the project has been designed to appeal to buyers seeking inner-city convenience without sacrificing space, flexibility, or amenity.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371016]</p>

<p>Inside the residences, Winwood Mckenzie has focused on adaptable layouts and integrated detailing, with features including custom joinery, and concealed storage solutions. The material palette leans into warm, tactile finishes intended to complement the building’s industrial architectural language.</p>

<p>Fabbrica’s rooftop amenity is a key part of the project offering. Spanning around 800 sqm, the communal rooftop includes a private dining room, communal kitchen, lounge spaces, work-from-home zones, and outdoor dining areas overlooking the Melbourne CBD skyline.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371017]</p>

<p>Landscape architecture studio Acre has introduced a layered rooftop garden designed to soften the urban setting while creating a more communal environment for residents.</p>

<p>The Fitzroy location also positions residents within walking distance of Brunswick Street, Smith Street, parks, cafés, galleries, and public transport, while remaining only minutes from Melbourne’s CBD. The project has an enviable Walk Score of 96.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371025]</p>

<p>Pace, which is also delivering the project as builder, has developed more than 100 projects across Melbourne over the past three decades. The vertically integrated approach has become increasingly common among developers seeking greater control over construction delivery amid broader market pressures affecting the apartment sector.</p>

<p>The strikingly contemporary Gore Street development is now around 70 per cent complete, with purchasers expected to move into their new homes in Spring 2026. A limited number of residences remain available under the current deposit match offer.</p>

<p><sup>*Conditions apply in relation to the deposit match offer.</sup></p>

<p>[smartcode_project_cta:default project_id=139552]</p>


Pace offers five per cent deposit match at Fabbrica Fitzroy ahead of Spring completion

<p data-end="181" data-start="0">Sydney developer Hyecorp's roots on the Lower North Shore stretch back three generations, and that deep understanding of the market continues to shape where and how it develops today.</p>

<p data-end="484" data-start="183">From high-rise towers to boutique apartment projects, the family-run developer has built its reputation by focusing on a part of Sydney it knows intimately. Founded by Michael Abolakian in the early 1990s, Hyecorp is now led by his sons Stephen, Troy and Patrick.</p>

<p data-end="657" data-start="486">Stephen Abolakian, joint managing director alongside Troy, has spent more than two decades in the business, overseeing development, planning, finance, marketing and sales.</p>

<p data-end="806" data-start="659">Abolakian says the developer's disciplined focus on where it chooses to operate has been, and continues to be, one of Hyecorp's greatest strengths.</p>

<p data-end="871" data-start="808">“We know the buyer profile exceptionally well,” Abolakian says.</p>

<p data-end="1097" data-start="873">“The demographics between places like Willoughby, Chatswood, St Leonards and Roseville are very similar. There are nuances between suburbs and projects, but culturally and from a buyer perspective, there’s a strong overlap.”</p>

<p data-end="1169" data-start="1099">That buyer has historically been overwhelmingly owner-occupier driven.</p>

<p data-end="1434" data-start="1171">Unlike many Sydney apartment developers that have traditionally relied heavily on investor demand, Hyecorp’s projects have typically attracted downsizers, upsizers, rightsizers and family owner-occupiers seeking long-term homes rather than short-term investments.</p>

<p data-end="1533" data-start="1436">“Historically, investors have been a much smaller portion of our demand profile,” Abolakian says.</p>

<p data-end="1665" data-start="1535">“We design for owner-occupiers. We don’t design for yield, we design for comfort, amenity, family living and long-term usability.”</p>

<p data-end="1721" data-start="1667">That philosophy extends well beyond apartment layouts.</p>

<p data-end="1966" data-start="1723">From landscaping and communal gardens to shared amenities and circulation spaces, Hyecorp’s developments are designed around how people actually live, something Abolakian believes has become increasingly important in Sydney’s apartment market.</p>

<p data-end="2051" data-start="1968">“There was probably a period where having an approved project in market was enough,” he says.</p>

<p data-end="2154" data-start="2053">“There wasn’t as much competition and if you built it, buyers would come. That’s no longer the case.”</p>

<p data-end="2386" data-start="2156">“There’s more supply in the pipeline now, particularly with TOD precincts and low and mid-rise reforms opening up opportunities across Sydney. Buyers have more choice, so if you get the product wrong, they’ll simply go elsewhere.”</p>

<p data-end="2386" data-start="2156">[smartcode_project:default project_id=110379 project_image_fid=311393]</p>

<p data-end="2549" data-start="2388">The shift has forced developers to become more sophisticated in how they approach apartment design, particularly as owner-occupier expectations continue to rise.</p>

<p data-end="2678" data-start="2551">For Hyecorp, that means thinking beyond who the buyer is today and designing for who they may become in five or 10 years' time.</p>

<p data-end="2757" data-start="2680">“People buying now often aren’t moving in for several years,” Abolakian says.</p>

<p data-end="2949" data-start="2759">“You might have a young couple buying today, but by the time they move in they may have children, older children, or changing lifestyle needs. You’ve got to think about how families evolve.”</p>

<p data-end="3219" data-start="3163">That thinking also shapes Hyecorp’s approach to amenity, which positions wellness at the forefront.</p>

<p data-end="3219" data-start="3163">[smartcode_project:default project_id=149594 project_image_fid=362634]</p>

<p data-end="3454" data-start="3221">While resort-style facilities have become increasingly common marketing tools across Sydney apartment developments, Abolakian says the challenge is ensuring amenities are genuinely usable and appropriate for the scale of the project.</p>

<p data-end="3546" data-start="3456">“If amenities are done right, they can materially improve the living experience,” he says, adding however that if you&nbsp;overdo it or get it wrong, you can end up with facilities nobody uses that simply create ongoing strata costs.”</p>

<p data-end="3919" data-start="3669">That balance is something Hyecorp is aiming to strike with projects like Roseville Avenue, one of the group's upcoming Lower North Shore developments, which Abolakian describes as bringing a resort-style living experience into a metropolitan setting.</p>

<p data-end="4005" data-start="3921">“It’s about creating something that feels special without being excessive,” he says.</p>

<p data-end="4112" data-start="4007">“Good gardens, quality apartments, thoughtful amenity. Creating that resort feeling in a metro location.”</p>

<p data-end="4112" data-start="4007"><img alt="Hyecorp" data-entity-type="file" data-entity-uuid="13c4c0f3-b1b7-44cf-9344-0b3d1d07797a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-02%20at%2012.14.57%E2%80%AFPM.png?VersionId=9OLWjyj2bYkDV35F78WJnyMSPfc2bJ2z" /></p>

<p data-end="4243" data-start="4114">The focus on owner-occupier product comes as Sydney’s apartment market continues to navigate a difficult development environment.&nbsp;For Hyecorp, maintaining an in-house operating model across construction, sales, marketing and development management has become increasingly important in navigating that environment.</p>

<p data-end="5230" data-start="5149">“We’ve always believed in keeping a lot of the process in-house,” Abolakian says.</p>

<p data-end="5392" data-start="5232">“It creates efficiencies, but it also creates quality control. You can make faster decisions and ensure the end product stays aligned with the original vision.”</p>

<p data-end="5674" data-start="5394">Despite the challenges, Abolakian believes demand for quality owner-occupier apartments across Sydney remains strong beneath the surface, particularly across established Lower North Shore suburbs where downsizers continue to seek new housing options close to existing communities.</p>

<p data-end="5723" data-start="5676">“There are definitely people waiting,” he says.</p>

<p data-end="5902" data-start="5725">“Once some of the broader uncertainty settles, whether that’s the global environment or some of the local economic noise, I think the right projects will perform very strongly.”</p>

<p style="text-align:start">Hyecorp currently has three residential developments on the market across Sydney’s Lower North Shore.&nbsp;Audrey, St Leonards, positioned opposite Newlands Park, is nearing completion and preparing to welcome its first residents, with the project now almost sold out.</p>

<p style="text-align:start">Hyecorp has also recently launched&nbsp;<a href="https://www.apartments.com.au/new-apartments/celine-chatswood-37-archer-street-chatswood-nsw-2067">Celine Chatswood</a>, an architectural tower, while continuing to deliver&nbsp;<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet Roseville</a>, a more boutique scale of development with just 34 apartments.</p>


Why Hyecorp continues to back Sydney's Lower North Shore apartment market

<p>South East Queensland’s apartment market is entering a new phase defined by rising prices, constrained affordability, and mounting pressure on the construction pipeline, according to RPM Group’s latest SEQ Apartments &amp; Townhomes Market Report.</p>

<p>The May 2026 report highlights a widening divide between what buyers can afford and what developers can viably deliver, with detached house prices continuing to push more buyers toward apartments across Brisbane, the Gold Coast, and the Sunshine Coast.</p>

<p>RPM says Brisbane’s median house price has reached around $1.5 million, accelerating the shift toward higher-density housing as buyers are increasingly priced out of the detached market.</p>

<p>[smartcode_project:default project_id=135094 project_image_fid=356540]</p>

<p>Median unit prices rose across all three major SEQ markets in the March quarter. Brisbane City recorded the strongest annual growth, with median unit prices climbing 21 per cent to $862,000, while the Gold Coast reached the highest overall median at $950,000, up 17 per cent year-on-year. The Sunshine Coast followed at $870,000, representing annual growth of nine per cent.</p>

<p>RPM noted the affordability gap between houses and units remains significant, with detached homes commanding premiums of 67 per cent in Brisbane and 68 per cent on the Gold Coast relative to apartments.</p>

<p>The report suggests this price disparity is increasingly consolidating buyer demand within the apartment market, particularly among downsizers and owner-occupiers.</p>

<p>“Demand is real. Supply is moving. But they’re operating on different timelines and the gap between what’s being built and what buyers can afford is the defining tension in this market right now,” RPM Queensland and NSW Managing Directors Peter Neale and Clinton Trezise said in the report.</p>

<p>[smartcode_project:default project_id=150787 project_image_fid=366230]</p>

<p>While approvals and commencements are strengthening, RPM argues the delivery pipeline remains constrained by construction costs, labour shortages, and extended build timelines.</p>

<p>Apartment approvals across Queensland increased 86 per cent over the year to February 2026, reaching 12,682 approvals, the highest level recorded since 2016. Brisbane overtook the Gold Coast as the state’s most active apartment approval market, with nearly 5,000 apartments approved over the past 12 months.</p>

<p>Unit commencements also strengthened considerably, rising 48 per cent year-on-year to 5,453 commencements in the December 2025 quarter, the highest level since 2018.</p>

<p>However, RPM’s research found apartment delivery timeframes have expanded sharply compared to the previous cycle. Projects are now averaging around 30 months from approval to completion, compared to roughly 20 months a decade ago.</p>

<p>[smartcode_project:default project_id=143932 project_image_fid=367515]</p>

<p>The number of units under construction has climbed to approximately 31,530 dwellings, nearing the previous 2016 peak, though projects are remaining in the pipeline for considerably longer.</p>

<p>Construction costs continue to weigh heavily on feasibility. RPM found the average apartment construction cost in Greater Brisbane reached $630,000 per dwelling in 2025, exceeding both Sydney and Melbourne. Coastal Queensland markets, including the Gold Coast and Sunshine Coast, were even higher at an average of $817,418 per apartment due to the prevalence of larger premium product.</p>

<p>The report also points to increasing pressure from Olympic-related infrastructure spending ahead of Brisbane 2032, with labour competition expected to intensify over the next several years.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370960]</p>

<p>ANZ Associate Director of Property Daniel Gradwell said the underlying demand drivers across South East Queensland remain strong, supported by interstate migration, downsizers, and population growth.</p>

<p>“The challenge is bringing enough supply to market to meet that demand, and nothing on the horizon makes that straightforward,” Gradwell said.</p>

<p>RPM’s analysis found the affordability challenge is becoming more pronounced in the new apartment market itself, with only three per cent of surveyed new apartments priced below $1 million.</p>

<p>Instead, the market is increasingly concentrated in higher price brackets, with the most common new apartment price band across SEQ sitting between $1.5 million and $1.75 million. Around half of all new apartment stock surveyed is priced below $2 million.</p>

<p>The report suggests developers are not necessarily avoiding lower price points by choice, but because current construction economics make delivering affordable apartments increasingly difficult at scale.</p>

<p>Rental conditions also remain tight across the region. Median rents for one-bedroom apartments rose 12 per cent in Brisbane over the past year to $580 per week, while Gold Coast one-bedroom rents increased nine per cent to $630.</p>

<p>Despite rising rents, RPM noted bond lodgements have generally trended downward over the past five years, indicating more apartments are being absorbed by owner-occupiers rather than retained as investor-held rental stock.</p>

<p>Looking ahead, RPM expects projects targeting the mid-market owner-occupier segment between $1.25 million and $2 million to remain the most viable part of the market, while premium projects in highly constrained coastal or riverfront locations continue to attract demand.</p>

<p>“Construction costs are rewriting the feasibility rulebook across Greater Brisbane, and with little relief in sight, only projects in the right price band, right location, and with presales secured early will make it through,” the report concludes.</p>


SEQ apartment demand outpacing affordable supply as construction timelines stretch: RPM

Foreign Investment

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Property 101: Foreign resident capital gains withholding rules

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<p><span>GUEST OBSERVER</span></p>
<p><span>Proposals by the NSW government to make it harder for foreign investors to buy housing will only slow down housing supply. </span></p>
<p><span>The proposals by NS</span><span>W Treasury to impose a 1.5 percent surcharge on land tax on foreign investors in housing will be </span><span>a disincentive to invest in NSW.</span></p>
<p><span>It </span><span>seems that the aim is to match the surcharge in Victoria which will remove the point of </span><span>difference that NSW has.</span></p>
<p><span>The Sydney region needs 33,200 new homes a year according to the Department of Planning </span><span>but last financial year only 27,348 were built leaving a shortfall of nearly 6,000 homes. We must do all we can to boost housing supply and foreign investors have been contributing to this particularly through new apartments. To send a message that these investments are not wanted </span><span>in NSW can only reduce the flow of capital into new housing.</span></p>
<p><span>Foreign investors often help make development pro</span><span>jects become feasible by underpinning the </span><span>pre sales with up to 15% of purchases and this helps local purchasers buy into a viable project.</span></p>
<p><span>The argument for the surcharge seems to be to free up more housing for first home buyers by </span><span>reducing the number of purchasers but this can only lead to less new homes being built. With an undersupply already pushing prices up a further reduction in supply is likely to only increase home </span><span>prices.</span></p>
<p><span>There has been a slow</span><span>-down in housing approvals in NSW over the last 6 to 8 months and an additional tax on foreign investment in housing will only lead to a further slow-down. Already Sydney has the council amalgamations causing some concerns over planning and discussion about adding value capture levies to new development beginning to affect confidence in the </span><span>market so the possible extra levy on foreign investment will further erode industry confidence.</span></p>
<p><span><em>Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.</em></span></p>
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jchancellor-FAypfDUnLy

Foreign investment in housing helps with much needed supply: Urban Taskforce

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<p><span>The Chinese-led consortium still wants to buy the S.Kidman &amp; Co properties.</span></p>
<p><span>It is tipped to pull its recent $370 million bid which will then be resubmitted after the Federal election.</span></p>
<p><span>The consortium includes the listed Australian Rural Capital and Chinese group Dakang, which is owned by Pengxin and Shangahai CRED.</span></p>
<p><span>S.Kidman &amp; Co, which covers almost 11 million hectares of cattle stations.</span></p>
<p><span>The Northern Territory Chief Minister Adam Giles says the federal government needs a consistent policy on foreign investment or it risks missing "opportunities" for the country.</span></p>
<p><span>The Country Liberal Parry leader said he understood the reasons for the decision, but stressed the need to ensure there's consistency in how these matters are determined.</span></p>
<p><span>"I want to see a food policy developed for Australia that ensures Australia's food security and recognises the opportunities that exist to meet emerging demand from Asia's growing middle class," Mr Giles said in a statement.</span></p>
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Kidman offerees set to return after federal election

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<p>Foreign investors have been driving the industrial property market in Sydney over the 12 months to March 2016, accounting for 46 percent of industrial stock sales according to Savills.</p>
<p><span style="line-height: 1.3em;">The total dollar value </span>of<span style="line-height: 1.3em;"> these transactions came exceeds $865 million, according to the April industrial briefing from Savills.</span></p>
<p><span style="line-height: 1.3em;">According to the report, f</span><span style="line-height: 1.3em;">oreign investors are looking for </span>industrial<span style="line-height: 1.3em;"> property due to the typically high yielding and generally long lease expiry profiles attributed to these assets.</span></p>
<p>"<span style="line-height: 1.3em;">The fourth quarter of 2015 saw Singaporean giant M&amp;G Investments, increase its Australian real estate exposure, paying $79.75 million in November for two Sydney industrial properties, in Ingleburn and Erskine Park," the report said.</span><span style="line-height: 1.3em;"><br></span></p>
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mick.cee-iDmgDDAmu8

Foreign investors driving Sydney industrial market: Savills

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<p><span>GUEST OBSERVER</span></p>
<p><span>The Foreign Investment Review Board (FIRB) annual report includes updated figures on approvals of foreign purchases of Australian residential real estate. </span></p>
<p><span>The data is annual, dated and has been heavily criticised in the past as an inaccurate measure of the true level of foreign real estate purchases in Australia. </span></p>
<p><span>However, it is essentially the only information on the topic with any sort of consistent back history and is therefore a rare clue as to the size, growth and composition of demand from this segment.</span></p>
<p><a href="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.00.54%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.00.54%20AM.png" alt=""></span></p>
<p>For 2014-15, the aggregate figures show:</p>
<p><span style="line-height: 1.3em;">36.8k approvals for residential real estate purchases totalling $57.9bn, equivalent to 7.3% of total sales by number and 15.5% by value (note that the treatment of ‘developer off the plan’ approvals means this likely understates the number of properties purchased but overstates the value)</span></p>
<p><span style="line-height: 1.3em;">FIRB approvals are up 60-65% on 2013-14, very strong growth but slower than the 98% gain – i.e. doubling – in the previous year and the 150%+ surge in 2010-11.<br></span></p>
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<p>The FIRB figures are lower but in the same ‘ballpark’ as the other main estimate of foreign buyer demand – the NAB property survey, respondents to which have put the proportion of foreign demand for residential real estate at around 5% for existing and 15% for newly built dwellings.</p>
<p><a href="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.05.38%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.05.38%20AM.png" alt=""></p>
<p>The state breakdown of FIRB approvals shows:</p>
<p><span style="line-height: 1.3em;">Vic continues to be the dominant location for properties being purchased by foreign buyers – approvals imply foreign buyers accounted for around 14% of total sales by number and over 30% by value, the latter up 80%yr.</span></p>
<p><span style="line-height: 1.3em;">Qld saw particularly strong growth in 2014-15, the value of FIRB approvals jumping 180%yr, but is still a small share overall – 17% compared to NSW and Vic which combined accounted for 77% of FIRB approvals (by value).</span></p>
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<p>More recent market data shows a sharp slowdown in turnover since mid-2015. With the number of domestic owner-occupier finance approvals rising over this period, other segments are clearly driving the slowdown. While lower domestic investor activity may be the main factor, some slowing in foreign buyer activity may also be contributing. </p>
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<p><em><span>Matthew Hassan</span> is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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FIRB residential approvals: Westpac's Matthew Hassan

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<div>It's almost becoming an annual tradition that the Treasury scrambles until 4.59pm on a Friday before pinging out the Foreign Investment Review Board (FIRB) Annual Report and nipping off for a few cold ones.</div>
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<div>And this year the finance team surely did not disappoint scrimmaging until mere moments before "schooner o'clock" on Friday before delivering the goods!</div>
<div> </div>
<div>Broadly as expected total foreign investment in Australia was very strong in FY2015, increasing by +16.3 percent to $194.6 billion, with real estate (both commercial and residential) the largest sector at $97 billion.</div>
<div> </div>
<div>The total number of real estate approvals increased from 23,428 to 37,347 in FY2015, mainly for new dwellings.</div>
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<div>Real estate approvals have more than tripled in only two years. Bazinga. </div>
<p><a href="/images/2016/04/11/FIRB1.jpg" target="_blank"> Click to enlarge</a></p>
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<div>Proposed investment in real estate soared to $96.9 billion, incorporating $36.2 billion of commercial real estate proposals.</div>
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<p><br><strong><span style="text-decoration: underline;">Foreign investment in residential real estate</span></strong></p>
<div>Proposed foreign investment in residential real estate ripped from $34.7 billion in FY2014 to $60.8 billion in FY2015, a level that could even not have been imagined only two years earlier.<span style="line-height: 1.3em;"> </span>
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<div>No proposals were rejected in FY2015 following three rejections in the preceding year, although 40 percent of approvals were granted with conditions attached, such as time periods for development or the requirement for temporary residents to sell should they depart Australia (approvals are filtered by specific questions, and therefore are to a large degree self-selecting).</div>
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<div>One divestment order was made in May 2015 by the FIRB, with an established $39 million residential Sydney property having been purchased illegally by a foreign company.</div>
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<div>Thereafter in May last year responsibility for divestment orders was assumed by the Australian Taxation Office (ATO), and a further 26 divestment orders were actioned.</div>
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<div>There was a massive 60 percent increase in the number of residential real estate approvals, with about 80 percent of those approvals for purchases of under $1 million in value (i.e. apartments).</div>
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<div>The bulk of this monster increase in foreign investment related to new real estate, including developer off the plan purchases, meaning that in aggregate foreign investors accounted for nearly 60 percent of all new residential construction.</div>
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<div><span><strong><span style="text-decoration: underline;">China's rise</span></strong></span></div>
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<div><span>The value of total FIRB approvals for China has increased by around 68 per cent since the prior year and accounted for around 33 per cent of the total value of approvals by foreign country in FY2015.</span></div>
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<div><span>Approvals for all Chinese investment in real estate, incorporating residential and commercial investment, all but doubled to $24.3 billion.</span></div>
<p><a href="/images/2016/04/11/FIRB4.jpg" target="_blank">Click to enlarge</a></p>
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<div>Finally, Melbourne retained its crown as the king of foreign investment in terms of residential real estate, reflecting the huge volumes of residential construction in that city, with Sydney comfortably  bopped into second place.</div>
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<div>There was also enormous foreign investment in vacant land in Victoria at $3.4 billion, far exceeding the $1 billion seen in New South Wales, for example.</div>
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<div>The above having been said, Queensland saw far larger increases in foreign residential real estate investment in percentage terms.</div>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<div>Foreign investment in Australian residential real estate is something of a double-edged sword.</div>
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<div>It is abundantly clear that foreign investors became more active in the purchase of new dwellings in FY2015, and monumentally so, with most of that foreign interest coming from China.</div>
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<div>Foreign investment has thus been a crucial factor in the strength of this residential construction boom, accounting for more than half of the investment in new dwellings, helping in turn to keep rental growth subdued.  </div>
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<div>On the flip side, foreign developers in Sydney have shown a willingness on occasion to pay prices for development opportunities far in excess of what locals are generally prepared to pay, putting significant upwards pressure on land values.</div>
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<div>Whether this can level of investment in new dwellings can be sustained is less clear as the residential construction cycle passes its peak imminently.</div>
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<div>Clearly there is vast foreign interest in Australian property from China, and it seems reasonable to me to suggest that any holes in the FIRB Annual Report are likely to be errors of omission rather than errors of commission.</div>
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<div>As such, the above information acts as a useful indicator, but it may not be complete.</div>
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<div>With immigration now rising again, the share of overseas born Aussies at a 120 year high, and as the number of international students in Australia skyrockets, the potential pathways for foreign capital to ultimately find its way into established residential property markets are multiplying, particularly in the largest capital cities.<br><br>A final thought or question for you - what percentage share of these new apartments bought by investors from the Chinese mainland ever make it to the local rental market?</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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pwargent-M4siyDbqQY

FIRB real estate approvals triple in two years: Pete Wargent

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<p>GUEST OBSERVER</p>
<p>Australia needs a fair foreign investment policy that offers Australians equal opportunities.</p>
<p>For foreign investors, Australia is a desirable country because of its stable economy, favourable weather conditions and proximity to Asia. Furthermore, 2016 will be the year international developers take centre stage in Sydney – more than in previous years.</p>
<p>There are many other factors at play that make Australia so desirable and, for investors, there is less red tape and fewer restrictions on how many properties they can buy. </p>
<p>In contrast, in China, for example, each province has different rules and regulations, with some provinces only allowing residents to purchase a maximum of two properties. </p>
<p>The International Monetary Fund says that China has the most expensive property in the world. The median house price in Beijing is believed to be 20 times the annual household disposable income, so it’s understandable that they’re looking elsewhere. Sydney and Melbourne represent good value by comparison.</p>
<p>The number of Chinese investors in Australia might fall in Australia within the next 2-3 years and that Indian investors will make Australia their first port of call.</p>
<p>In my opinion, we will start to see Chinese investors possibly fading away from the Australian market depending on their slowing economy in the next few years, and will see a genuine emergence of buyers from India.  They will find it attractive for the very same reasons the Chinese do.</p>
<p>Land and property sales data suggests that foreign investors are now getting in on the process earlier to close the loop.</p>
<p>Many sites have been snapped up by international developers and the reality is that we can’t stop it from happening, not in this global economy. In saying that, it’s only fair, right and appropriate that Australian residents have, at the very least, equal opportunity.</p>
<p>Australian residents should be looked after; they shouldn’t be at a disadvantage to foreign nationals.</p>
<p>Safeguarding the interests of Australian residents should not be confused with being xenophobic, as they’re two very different things. We should still openly invite foreign investment, I just believe that it should come with more restriction and regulation. I was born in Britain so this isn’t a jingoistic standpoint, I merely want to see the same rules be applied to anyone buying in Australia irrespective of where they are from.</p>
<p>Conflicting information about the current market is making it confusing for Australian investors struggling to keep up.</p>
<p>As far as I can tell, there aren’t any accurate numbers available on the extent to which foreign investment is impacting the local investor community and house prices. Significant research is needed. As a real estate head with years of experience in the Australian market, I myself am having difficulty comprehending the situation, so what chance does the average layperson have?</p>
<p><strong>Five solutions for a fair foreign investment policy that gives Australians equal opportunities:</strong></p>
<p><strong>1. Introduction of a levy.</strong> </p>
<p>I absolutely advocate the introduction of a levy.  Last year the government introduced a tax for overseas investors, but in my opinion, this should be increased.  Australian residents are forced to pay for extras such as stamp duty when they buy property and I believe overseas investors should have to pay even more.</p>
<p><strong>2. Placing a cap on the number of properties sold to overseas investors.</strong> </p>
<p>We should regulate the number of properties on Australian soil that are sold to overseas investors:</p>
<p>It’s a bit of a mockery if Chinese investors can only buy two properties in some of their own provinces, but they can come to Australia and can buy 10. It doesn’t matter where investors are coming from – and they’re coming from all over the globe – it’s about looking after the interests of the Australian people.  </p>
<p><strong>3. Clean money assessment.</strong></p>
<p> A handful of high-profile and high-net cases last year were intentionally made public to oust some illegal transactions happening and spook off unscrupulous investors, and Douglas believes that many more could have gone unnoticed. </p>
<p>These homes were just the tip of the iceberg and my question is, what about the rest of the iceberg? Do we have any idea how big it is? We know that illegal transactions are taking place because of these cases, and that these acquisitions by foreign investors breach regulations. There is a strong suggestion that this is regularly taking place in the upper echelon of the Sydney and Melbourne markets.</p>
<p>We need to take a harder look into where the money is coming from, as there has been some suggestion that it’s not always clean. The UK government, for example, has implemented money laundering checks and Australia should be doing the same.</p>
<p><strong>4. Financing rules around the acquisition process.</strong> </p>
<p>As is currently stands, financing is not fair for the local investor. We know that a Chinese financial institution based in Australia offers zero deposit home loans for Chinese investors purchasing Australian property. Here, under new macroprudential guidelines, we have Australian residents now required to pay a 20 per cent deposit on a property whilst international buyers can completely circumnavigate the system. It’s ludicrous, all buyers should be on a level playing field in the process and financial aspect.</p>
<p><strong>5. Percentage of developments must be sold to Australian residents.</strong></p>
<p>Up until 2008, developers had to sell a portion of properties to Australian residents. This lifted in the GFC but it’s my view that we should re-establish it and place a limit on how many investments they can buy. I heard that last year only 10-15 per cent of off-the-plan developments in Sydney and Melbourne were sold to overseas investors, but that conflicts with other reliable reports, saying that it was closer to 40 per cent.</p>
<p>It’s increasingly common for foreign investors to buy and develop or redevelop, then sell property on Australian soil off-shore or to international investors without Australian residents even getting a look in.  We need to look at the vulnerability of our market – does selling too much to overseas investors make us become vulnerable to factors outside of our control?</p>
<p><em><span>DOUGLAS DRISCOLL</span> is CEO of real estate agency <a href="https://www.starrpartners.com.au/" target="_blank">Starr Partners</a>.</em></p>
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douglasdriscoll-EkfdEjJSsC

Foreign investment impact on local market worsens

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<p><span>The Treasurer Scott Morrison has announced that he ordered the sale of eight more properties due to more breaches in foreign investment ownership laws.</span></p>
<p><span>The owners had come from Malaysia, Taiwan, the United States, India, Canada and China. </span></p>
<p><span>The newest enforced sales takes the tally to 27 properties that the federal government have ordered to be sold, totalling around $75 million in value. <a href="/news/australian-buyer-lola-wang-li-emerges-with-villa-del-mare-the-39-million-point-piper-firb-home"><span>Villa del Mare in Point Piper</span></a> sold last year at $39 million being the headline one. </span></p>
<p><span>Queensland took the brunt of the latest divestiture orders with properties in Eight Mile Plans, Park Ridge, Robertson and Crestmead all being forced to sell.</span></p>
<p><span>There was one property from Windsor, New South Wales and three from Victoria on Morrison's hit list, the most expensive being 35-37 Regent Street in Mount Waverley which was purchased for $5.1 million without permission, and resold under the amnesty at $6 million late last year.</span></p>
<p><span><a href="https://www.realestate.com.au/property-house-vic-mount+waverley-119802483" target="_blank">The four bedroom home is one of Mount Waverley's largest land holdings</a></span><span> over 4097 sqm and features a tennis court, swimming pool and pool house with sauna, was briefly owned by a Malaysian.</span></p>
<p>It was advertised as having the potential for redevelopment into multiple townhouses. <a href="/news">CoreLogic RP Data puts the house price median at $1.2 million</a>.</p>
<p><span>Morrison said that the tax office are now looking after investigations into illegal purchases and still have 800 cases to look in to.</span></p>
<p><span>He also said the government amnesty period meant the owners of the eight properties would escape criminal charges.</span></p>
<p><span>"The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules.</span></p>
<p><span>"Under the reduced penalty period announced in May, the investors linked to the eight properties now have 12 months to sell the properties, rather than the normal three month period, and will not be referred for criminal prosecution," he said.</span></p>
<p><span>Fines of up to $135,000 or three years imprisonment can be enforced for individuals and $675,000 can be imposed for companies.</span></p>
<p>The Mt Waverley foreign buyers are understood to have come forward under an amnesty period between May and November, so were not referred for prosecution.</p>
<p>The homes forced back to market in the Brisbane and Logan suburbs of Eight Mile Plains, Park Ridge, Robertson and Crestmead were priced from $780,000 to $250,000. In Melbourne the Blackburn property was valued at $525,000 and in Carlton at $215,000 and in Windsor, outside Sydney a $518,000 property.</p>
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jrobinson-rf4aSBido9

Treasurer orders foreigners to sell Mt Waverley property

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<p><span>Knight Frank have noted from 1 December 2015, all foreign investors must now pay a fee before their foreign investment application will be processed and stricter penalties have been ramped up by the Australian Taxation Office for those who breach the rules.</span></p>
<p><span>Overview</span></p>
<p><span>The current Australian foreign investment framework for residential property is designed to generate new housing supply. The construction of new houses and apartments is aimed to increase the opportunity for people to purchase, as well as, stimulate economic activity with the employment of builders and suppliers. </span></p>
<p><span>The recent changes introduced by the Federal Government are designed not to deter foreign investment into Australia, rather ensure the current rules that limit foreign investment in established dwellings are enforced.</span></p>
<p><span>Until this time, there has been poor policing by the small team at the Foreign Investment Review Board (FIRB) resulting in limited penalties imposed on those who breach the rules. For a long time, the framework was undermined due to poor data collection, along with a lack of audit, compliance and enforcement.</span></p>
<p><span>Given no fees were collected on application, it made it quite difficult for the FIRB to justify committing more Australian tax-payer resources, despite the number of foreign investment applicants growing almost three- fold over the course of 2013-14.</span></p>
<p><span>Over the same time, residential property prices rose significantly in many suburbs across the country. As a result, the Australian public became increasingly concerned that the influx of foreign purchasers were having a direct impact on mainstream (established) house prices.</span></p>
<p><span>This placed pressure on the now former Treasurer, Hon Joe Hockey MP, to provide clarification on the role foreign investment plays in residential property.</span></p>
<p><span>On the 19 March 2014, he commissioned a study to be undertaken by the House of Representatives Standing Committee on Economics. After a lengthy and comprehensive eight month inquiry, the House Economics Committee found that the current foreign investment structure should be retained but made 12 practical recommendations to ensure there is better compliance within the existing framework. </span></p>
<p><span>A consultation process followed with the public and key industry bodies. It was proposed that all property administration functions were transferred to the Australian Taxation Office (ATO). The ATO was seen to be well-placed to utilise it’s data-matching systems to identify possible breaches with an increase in penalties. </span></p>
<p><span>The Government then introduced the legislation into Parliament in the Spring sitting. It was slated in late November 2015 with the changes taking effect from 1 December 2015.</span></p>
<p><span>Current rules for foreign investors</span></p>
<p><span>The current rules around foreign </span><span style="line-height: 1.3em;">investment in residential property aims to direct investment into new housing, increasing the housing supply and support local economic activity. All foreign persons, that is temporary residents and non-residents, can apply to purchase vacant residential land for development and newly constructed dwellings in Australia.</span></p>
<p><span>Non-resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, temporary residents can apply to purchase one established dwelling to use as their residence while they live in Australia, although on the condition the property is sold when it ceases to be their principle place of residence. </span></p>
<p><span>FOREIGN INVESTOR APPLICATION FEES NOW APPLICABLE</span></p>
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<li><span>Applicants will pay a fee to the ATO before their foreign investment application is processed.</span></li>
<li><span>The fees apply for each application and is uncapped if the property is valued over AUD$1 million.</span></li>
<li><span>If an application falls into a number of categories, the category with the highest fee would apply.</span></li>
<li><span>The fee on application does not provide any assurance of securing the property. </span></li>
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<p><span>ENHANCED COMPLIANCE AND ENFORCEMENT </span></p>
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<span style="line-height: 1.3em;">The Government has provided $47.5 million over four years to the </span><span style="line-height: 1.3em;">ATO to improve compliance and strengthen the enforcement of the rules.</span>
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<span style="line-height: 1.3em;">The ATO has the capacity to cover more than 600 million transactions annually through its data-matching programs. The ATO matches its own taxpayer data with a variety of third party sources, including FIRB, </span><span style="line-height: 1.3em;">immigration, AUSTRAC, banking data and state and territory land title data.</span>
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<span style="line-height: 1.3em;">Investors who have breached the rules risk being identified by the ATO as part of its compliance activities. </span><span style="line-height: 1.3em;">These investors may then face criminal and/or civil prosecution. </span>
</li>
</ul>
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<p><span>REVISED PENALTIES FOR BREACHING THE FOREIGN INVESTMENT RULES </span></p>
<p><span>The Australian Federal Government is increasing the existing criminal penalties and introducing new civil pecuniary penalties for those who breach the foreign investment rules. For more detailed information please refer to the FIRB website www.firb.gov.au. </span></p>
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<p><span>Penalty Regime for Foreign Investors, Residential Property </span></p>
<p><span>Under Foreign Acquisitions and Takeovers Legislation Amendment Bill 201 </span></p>
<p><a href="/images/2016/01/14/Screen%20Shot%202016-01-14%20at%203.17.41%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span> <img src="/images/2016/01/14/Screen%20Shot%202016-01-14%20at%203.17.41%20PM.png" alt="" width="729" height="858"></span></p>
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<p><span>NEW APPLICATION FEES AND PENALTIES FOR DEVELOPERS </span></p>
<p><span>Property developers can apply for a new dwelling exemption certificate to sell new dwellings in a development of 50 or more residences to foreign investors. </span><span>The fee for a new dwelling exemption certificate for a developer is AUD$25,000 upfront, with a reconciliation of properties sold to foreign persons based on the above rates. </span></p>
<p><span>The Government has tightened the rules around the use of new dwellings exemption certificates by </span><span>limiting the value of all apartments that can be bought by a single foreign investor to $3 million in the one development. </span><span>If foreign investors want to purchase apartments above this value, they will have to seek individual approval. </span></p>
<p><a href="/images/2016/01/14/Screen%20Shot%202016-01-14%20at%203.22.36%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/01/14/Screen%20Shot%202016-01-14%20at%203.22.36%20PM.png" alt=""></span></p>
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Property 101: Foreign investment divestiture fines in Australia

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<p>GUEST OBSERVER</p>
<p>There have been many articles recently by those in the industry claiming there is a massive issue with housing affordability for first home buyers. More often than not, foreign investors are the target of this fury.</p>
<p>Often these articles quote the alarmist figures of first home buyers numbers (as a % of all dwellings financed) dropping from the long-term average of 22% to just 12%.</p>
<p>Issues such as reduced affordability and foreign investment are often touted as the reasons for this drop-off in first home buyer activity. </p>
<p>Unfortunately, for those espousing this propaganda, the figures are simply incorrect.</p>
<p>Way back in February 2015, the ABS announced that there was an issue with the data.</p>
<p>“An investigation by the ABS has identified that the data on first home buyers are under-reported, as some lenders have only reported loans to first home buyers who have also received a First Home Owner Grant.”</p>
<p>Now, quite clearly, this fails to capture first home buyers that do not utilise the grant, do not qualify for the grant, or who choose to purchase a property that is not eligible to receive a grant. Quite simply, this statistic is a completely inadequate indicator of first home buyer activity.</p>
<p>Yet, it continues to be quoted by those that either don’t understand the information or who choose to use this statistic to further their own cause regardless.</p>
<p>In June 2015 the RBA submission to the Inquiry into Home Ownership stated the following:</p>
<p>“Housing ‘affordability’, measured as the share of average household income required to service a loan on a median-priced dwelling, has continued to cycle between 20 and 30 per cent, and is currently well below previous peaks.”</p>
<p>The vast majority of first home buyers purchase well below the median price and in many instances can purchase with as little as 5% deposit or with the support of family, no deposit at all.</p>
<p>Some would argue, that there has never been a better time for First Home Buyers to enter the market.</p>
<p>But, are they simply being outbid by Foreign Investors at auction as is often claimed?</p>
<p>Well, the Foreign Investment Review Board clearly states that Foreign Investors can only purchase:</p>
<ul>
<li>A New Dwelling</li>
<li>Vacant Land</li>
<li>An Established Dwelling To Demolish &amp; Redevelop</li>
</ul>
<p>I don’t think it’s too much of a stretch to rule first home buyers out of the latter category, so, the only competition that first home buyers face is when purchasing brand new dwellings or off the plan.</p>
<p>The majority of these are offered at a fixed price by the developer and rarely go to auction, so, again, the implied issue of first home buyers being outbid at auction is again a long bow to draw.</p>
<p>Historically, first home buyers purchase older or smaller properties in locations they can afford and work their way up the property ladder over a number of years to achieve their dream property. This is often achieved through a process of increasing income with age and experience and a build-up of equity-either manufactured through renovations or naturally as part of the property cycle.</p>
<p>I would suggest that you listen very closely to those that are claiming there are so many issues with housing affordability for first home buyers and question not only their motives, but, the so-called facts they use to support these claims.</p>
<p><em>Paul Bevan is senior advisor at Dream Financial Services and can be contacted <a href="https://www.dreamfinancial.com.au/about" target="_blank">here</a>.</em></p>
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