There is a lot of talk at the moment about the affordability of property and a lot of discussion about the impact of overseas buyers on the local market.
This discussion does not only apply to just property, as we see this also in business. When jobs are lost to overseas workers, companies or industries, this can often cause friction with the local workers and population too.
Trying to manage these concerns is often referred to as “protectionism”. In reality you are putting up barriers or introducing policies to support the local workers or home owners. These normally come in the form of tariffs, taxes or government policy. There is often a wide spread view about if these help the country or hinder its progress.
So with all the discussion about overseas property investors, I thought it would be good to reveal the actual facts about what they can and cannot buy. Furthermore, if you are buying a property now, how these facts might shape your thinking.
Currently an overseas investor (with the approval of the Foreign Investment Review Board) could consider purchasing the following assets:
- A foreign investor can buy a new home or unit directly from a developer.
- A foreign investor can also buy a vacant block of land to build a new home as long as it is built within 24 months.
- A foreign investor can buy a vacant block of land and build multiple dwellings as long as it is done within 24 months.
- A foreign investor can buy an existing property that has a dwelling on the property as long as they can justify that the property is at the end of it’s economic life and needs to be demolished and rebuilt.
We hear a lot in the paper about point 1 but rarely about 2,3 and particularly point 4. So how does this impact on the market if you were trying to purchase a home?
I think it is important to realise that if you are in one of these categories above then automatically you are no longer just competing with the local population for the upcoming assets, but now competing with the global community.
It might be fair to stay that if you had a limited budget then staying away from these above categories may reduce down some of your competition. For example if you purchased an existing apartment, and existing town house which is in good condition or a nice home in nice condition you would stay clear of the hyper-market competition and global buyers.
Like all great ideas, it is important to seek professional guidance whenever you are a considering these life changing decisions – and we would of course recommend AJ Financial Planning.