Federal treasurer Joe Hockey has a solution to anyone concerned about buying a home in Sydney’s hot property market – get a high-paying job.
“The starting point for first home buyers is to get a good job that pays good money,” the treasurer said at a media conference today when asked about Sydney’s perceived “housing bubble”.
He also explained that the prices are not as bad as analysts argue because “if housing were unaffordable in Sydney, no one would be buying it”.
Some are comparing Hockey’s latest remarks to last year’s ‘poor people don’t drive’ comments.
Earlier today, the treasurer, whose Sydney home is owned by his wife, and is estimated to be worth more than $10 million, and revealed he’d reported a neighbour to the Foreign Investment Review Board, suspecting they may have contravened foreign investment real estate rules after buying an existing home.
Under existing laws, foreign investors can only buy new housing. The exception is a temporary resident, but they must sell the property when they leave Australia. Hockey said the underlying premise of the government policy is that foreign investors should create construction jobs.
The treasurer’s anecdote was revealed as he pushes the case for increased scrutiny on foreign investors amid rapidly rising capital city property markets.
Speaking to Neil Mitchell on Melbourne’s 3AW, Hockey, who lives in the posh Sydney harbourside suburb of Hunters Hill, said he dobbed in the neighbour, 1km down the road, but discovered they had FIRB approval after successfully arguing they were adding to housing stock by building a granny flat out the back.
“I thought that’s ridiculous. It’s a heritage house,” the treasurer said, adding that he regarded the approval as “on pretty spurious grounds”.
He’s now waiting to hear back on the matter.
Nearly 200 suspected breaches are currently being investigated and 24 foreign investors have used an amnesty to volunteer potential illegal home ownership, including a UK national who bought a $700,000 house in Western Australian. Foreigners who fess up before a government amnesty ends and tougher penalties come into effect on December 1 will be given more time to dispose of their properties.
The government plans to keep any capital gains from divestment orders.
In March, Hockey used FIRB laws for the first time in eight years to force one of China’s richest men to sell a $39 million Sydney harbourside mansion because the foreign-owned company that bought it failed to inform FIRB of the intended purchase.
The treasurer said potential tax fraud had also emerged as an issue during FIRB investigations due to foreign investors not declaring rental income. He cited one investor with 10 properties across two states, worth between $300,000 and $1.4 million each, as an example authorities are “certainly having a good look at”.
He said Victoria received the largest amount of foreign investment in the past 12 months and that in the last year, the China overtook the USA and the biggest source of international residential real estate investment.
The government’s crackdown on foreign investment will also target lawyers, accountants, real estate agents or anyone else who helps hide the nationality of foreign buyers.
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