Governments subsidise foreigners to buy Aussie homes

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During the Global Financial Crisis (GFC), the Rudd Government relaxed foreign ownership rules to make it easier for overseas buyers to purchase Australian property. This measure, which was the antithesis of a housing affordability policy, was justified on the grounds that it would support the property market and prevent a downturn.

We are experiencing similar shenanigans with the COVID-19 pandemic, with Australia’s governments offering foreign home buyers up to $50,000 in subsidies to purchase a new Australian home.

From News.com.au:

Chinese buyers are being lured back to the Australian property market by generous government rebates of up to $50,000 on a new home, with calls to extend the incentive schemes past their expiry dates next year.

Lily Chong, the Perth-based Australian head of Chinese property portal Juwai IQI, said overseas buyers had started looking past the COVID-19 pandemic and were planning for when travel restrictions eased.

“Australia will pay foreigners up to $50,000 to buy a new home,” Ms Chong said…

“Because of the pandemic, most foreign buyers don’t know about these incentives,” Ms Chong said.

“When we explain it to them, their eyes pop open. Buyers are rushing for us to get their deals done before the deadline expires”…

Ms Chong predicted the incentives would shift overseas buyers from other parts of the country to WA and to a lesser extent, to Melbourne…

Juwai IQI co-founder Georg Chmiel said while it “sounds strange to pay foreigners to buy houses and apartments, in fact it makes sense”.

“This is a triple win for Australia,” he said.

“These incentives will reduce the housing shortage, stimulate the economy with construction jobs, and protect the housing market from a sharp fall.”

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I await the day that Australia’s governments implement a ‘First Immigrants Grant’ (FIG) to new migrants.

These are the types of twisted policies that you get when you are the property equivalent of a narco state.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.