ASX-listed online property agency iBuyNew Group Limited said the federal government plans to restrict foreigners from buying more than half the homes or apartments in any new development will only discourage offshore developers from doing business in Australia.
iBuyNew founder and chief executive Mark Mendel said the proposal pitched as one of a raft of possible measures in the May budget to help young Australians enter the property market would be a waste of taxpayers’ money and potentially disastrous for the economy.
Mendel said foreign buyers already faced a broad range of restrictions and fees when it comes to investing in property in Australia.
“Enough is enough,” he said. “The roll-on effect if this latest proposal is included in the May budget could be an economic disaster for Australia.
“This is just a ploy from the Government to make it look like they are doing something for first home buyers but it will just discourage offshore developers from investing in Australia.
“The foreign buyer restriction could be the last straw and could result in driving away foreign buyers investing in Australian property. Excessive surcharges and further restrictions on foreign buyers could also lead to fewer international students coming to Australia as well as a slower population growth and a rise in unemployment.”
Mendel said most buildings developed by onshore developers rely on local funding which typically limits their sales to foreign investors at 15-20 per cent of the total sales.
He said this was not the first-time foreign buyers have faced a limit on the dwellings they can buy in Australia.
“Before 2009, there was a regulation that meant developers could only sell half of their new dwellings in any development to foreign buyers,” he said.
“But this all changed when the Global Financial Crisis (GFC) hit and the then Labor government decided to abolish the foreign limit for off the plan properties. This meant foreign buyers could buy whole developments if they were marketed both locally and overseas.”
In an interview with Elite Agent on Tuesday, Mendel said despite the current curb placed on foreigners in regards to lending, interested purchasers from Malaysia, Singapore, Indonesia and China were still keen to buy properties in Australia.
He said many of these foreigners were interested in buying properties in Australia as they had intentions to migrate Down Under in the next 12 months time or were planning to send their children for higher education here which explained why they preferred to buy dwellings near universities.
“We specialise in selling off the plan and new properties. We currently have 194 projects and a total of 5,000 different properties to purchase from which are all located in the Eastern states. We have started expanding to Western Australia and South Australia and expect to roll out these services in the next two months. We currently have 26,000 views in a month whereby 70 percent are investors and 30 percent consist of first home buyers or downsizers,” he said.