Offshore buyers were given the green light to sink $5.1 billion into Victorian residential real estate in the previous financial year, with the figure plummeting from $11.04 billion and $28 billion the two years prior.
But the state remained the housing market of choice for foreign investors — and rule breakers.
The Foreign Investment Review Board’s latest annual report showed 4631 applications to buy new and existing homes, vacant land and properties for development in Victoria were approved in 2017-18, worth $5.1 billion.
This equated to 46 per cent of the nation’s 10,036 authorised purchases, worth $12.5 billion.
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The Australia-wide figures were down 3162 and $17.5 billion respectively on the year prior, with the report attributing the fall to “a drop off in demand from overseas buyers”.
The buyer interest had been curbed by foreign investment application fees, difficulties obtaining finance in Australia, “increased restrictions on capital transfers in home countries” and tax hikes, it said.
The latter included the state government upping the foreign buyer stamp duty surcharge from 3 per cent to 7 per cent in 2016.
The report — which details how many offshore buyer applications were approved and their dollar value, but not actual completed sales — also shows New South Wales took the second biggest share of authorised offshore investment at 23 per cent (2340 approved applications worth $4.4 billion).
It was followed by Queensland at 17 per cent (1723, $1.4 billion) and Western Australia at 7 per cent (696, $500 million).
The Chinese remained the most prominent offshore buyers of Australian residential and commercial real estate, despite their investment also dropping off.
They were permitted to spend $12.7 billion in 2017-18 — down from $15.3 billion and $31.9 billion the two years prior.
Singapore buyers had the next biggest appetite for Aussie property, approved to spend $7.8 billion, followed by those from the US, $5.8 billion.
Similarly to the FIRB report, leading international property website Juwai.com attributed “the unexpected cancelling of promised mortgage loans by Australian banks, higher foreign stamp duty taxes, and capital controls making it more difficult to move money from China” to the fall in Chinese investment.
The FIRB report also revealed 600 property sales were found to have breached Australia’s foreign investment rules, up annually from 549, from 1404 completed investigations.
Foreign owners were ordered to sell 131 properties as a result, compared to 96 the year before.
Victoria was home to more than half the breaches (53.7 per cent) and NSW, 20 per cent.
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