FIRB Changes Increase Demand for Property
With the latest changes of the FIRB laws, foreign investors are turning their attention to Australian property.
Interested foreign parties are currently required to apply for approval through FIRB (Foreign Investment Review Board) as specified by The Australian Federal Government's Owner's Legislation.
FIRB's alterations have, in effect, made it easier for foreign investors to purchase commercial or residential property. The main outcome from these changes was that the supply of dwellings would be increased through the construction of new properties including units, townhouses, house and land. Through focusing foreign investment funds to the property industry, this is hoped to be achieved.
Previous requirements detailed that only 50&% of newly developed apartments could be sold to foreign buyers. However, the reviewed laws have allowed for 100% be available to foreign investors. It is also compulsory that properties purchased by foreign buyers are new dwellings. However, the new FIRB changes show that the definition of "new dwelling" has been changed. New dwellings now include properties that haven't been sold but have been rented out for less than 12 months.
The new laws also enable foreign investors, who have acquired vacant residential land, to build within 24 months. This time frame adds an extra 12 months to the previous laws.
Foreign business owners are being drawn in by the fact that they are now permitted to purchase established dwellings, as long it's for the use to base their Australian staff. However, if the property is expected to remain vacant for more than six months, it is specified that they are to be rented out or sold.
There is also good news for temporary residents, such as students and those with valid visas. Previously they were restricted to a limit of $300,000 value if they wished to purchase an established dwelling as their main residence.
It appears that these changes already seem to be working as international buyers have increased by around 10 percent, as noted by John Bongiorno, Director of Marshall White and Co.
Tina Edwards, Manager at Brisbane-based Yong Real Estate, deals with local and international Asian buyers and confirmed this trend. She added that investments from China ‘‘really soared recently." She also stated that the increase in Chinese investors have taken up as much as 90 per cent of the firms transactions.
The impact of demand from foreign investment has raised questions as to the effect that will occur on housing affordability. Some agents are concerned that the demand will have a negative outcome for local buyers in the property market
The relaxation of the FIRB rules, appears to have had a direct affect on the demand for property within Australia, which is already apparent and will become more so as we progress through the year.
