Australia Reverses Rules on Foreign Ownership

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A year after relaxing rules on foreign ownership of property, the Australia government moved this week to reinstate tougher standards.

Under the new proposals, temporary residents will also have to seek permission from the Foreign Investment Review Board (FIRB) to buy any real estate in Australia. And they will have to sell property upon leaving the country.

Government officials are also vowing to crack down on foreign buyers who flaunt the laws, including estate agents, the Sydney Morning Herald reports.

The actions come after a much-publicized pre-election-year debate about the impact of foreign buyers on the housing market, particularly Chinese investors. Some analysts charge that the foreign buyers have been driving up prices, to the detriment of domestic buyers.

Residential prices in Australia jumped 5.2 percent in the fourth quarter of 2009, according to the latest Knight Frank report.

"I have been examining whether features of the foreign investment...real estate regime may need strengthening, and I have come to the conclusion that in some respects that is what is required," assistant treasurer Nick Sherry told the Morning Herald.

As it stands, foreign residents without visas are not allowed to buy existing houses and can only purchase property if it adds to the housing stock, the paper notes. If a foreign resident does buy land, they now have to build it on it within two years or face a requirement to sell it.

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