Asian property investors have been accused of exploiting a loophole in the law by getting younger relatives to study in Australia so they can buy homes.
Industry Super Australia (ISA) revealed foreign investors were taking advantage of the rule which allowed temporary residents, including foreign students, to buy property.
The ISA report said the loophole was pushing up prices in an already overstimulated and overpriced market.
Asian property investors are accused of exploiting a loophole in the law by getting younger relatives to study in Australia so they can buy homes (file picture of a house viewing)
ISA chief economist Stephen Anthony
ISA chief economist Stephen Anthony urged the government to prevent foreigners from buying all existing property, forcing them to invest in only new developments.
‘It would direct all foreign investment in residential real estate to expanding supply,’ the report said, according to the Herald Sun.
‘Purchases of existing properties often just add to overheated property markets in the most highly desirable localities.’
The ISA report exposed a link between loan activity, the sale of existing houses in Sydney and the number of foreign students coming to the city to study.
Chinese real estate investment rose from about $1 billion to $32 billion in the past six years, while foreign student enrolment soared (file picture of a house viewing)
Chinese real estate investment rose from about $1 billion to $32 billion in the past six years, while foreign student enrolment soared.
The ISA report suggested the government encourage foreigners to live in regional areas, in an effort to control the overheated property market.
‘A work and study permit system that rewarded new arrivals for settling in regions away from hot property markets would be a very obvious enhancement,’ it said.
Treasurer Scott Morrison said strict rules for foreign investors were already in place, and were recently further tightened.
The ISA report suggested the government encourage foreigners to live in regional areas, in an effort to control the overheated property market
Treasurer Scott Morrison said strict rules for foreign investors were already in place, and were recently further tightened (file picture of a house viewing)
He said the government put a limit on foreign ownership in new developments in the 2017/18 Federal Budget and tightened rules to ensure foreign investors did not escape capital gains tax.
Mr Morrison also said an annual charge was introduced for foreign investors who bought residential property and left it vacant.
‘The government has also ordered the sale of more than $134 million worth of illegally acquired properties,’ he said.