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Australian govt 'needs to ban f...

Australian govt 'needs to ban foreign students from purchasing properties'

Students from overseas should be banned from purchasing properties in the Australian market, according to a new report.

ISA has called for an end to property buying among foreign students, as it has emerged that their parents are using legal loopholes to transfer the ownership of these homes to their own names once their children are done studying.

As a result, this makes them Australian property owners, even though they have not had to go through traditional home-buying channels.

Often, student properties are located in the centre of the big cities, in close proximity to the universities, so this means the parents of foreign students subsequently end up with properties in prime locations that are highly coveted among domestic investors, pushing them out of the market.

ISA is therefore calling on the Australian government to ban students from overseas from purchasing properties down under, with some calling for a ban on all foreigners buying existing homes in the country, as it is leading to an unfair weighting of domestic versus foreign ownership.

And if Australian investors are not earning as much as they could, this may be having a knock-on adverse effect on the wider national economy.

ISA doesn't go quite as far as suggesting foreigners should be banned from investing in new housing stock, however, as the country relies heavily on overseas parties spending in new areas of its property market to help it to grow and develop.

The ISA report stated: "It would direct all foreign investment in residential real estate to expanding supply.

"While foreign investment inflows to build new apartments are always welcomed, purchases of existing properties often just add to overheated property markets in the most highly desirable localities."

ISA highlighted that this loophole is particularly popular among Chinese families, with buyers from this country already dominating the Australian property market.

Indeed, the number of people from overseas studying in Australia increased substantially to reach 343,000 last year. At the same time, Chinese investment in real estate down under rose to $32 billion in 2015-16 compared to just $1 billion in 2008-09.

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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