SYDNEY, March 13 (Xinhua) -- New laws are being considered by the Australian Government, that would see foreign investors into Australia's real estate market be limited from buying more than half of the residences in any new development.
A number of measures to combat the housing affordability crisis that has plagued the major markets in Sydney and Melbourne have been floated by legislators, including changes to negative gearing and capital gains tax concessions for investors.
A spokesperson for Federal Treasurer Scott Morrison told News Ltd on Sunday, that the government has taken "consistent and determined" action in relation to foreign investment, but refused to speculate as to whether the proposal would form part of the budget set to be handed down in May this year.
During the years leading up to 2009, similar rules were in place under the then Labor Government, which saw any new dwellings having to be no more than 50 percent owned by foreign investors.
However, when the Global Financial Crisis hit, changes were made that saw the abolition of those rules, allowing foreign investors to purchase any percentage of the developments, on the proviso that they were made available to locals and those from overseas.
Currently in Australia, according to a Treasury paper, overseas buyers accounted for 61 Australian billion dollars (46.15 billion U.S. dollars) of purchases in real estate during the 2015 financial year, but the overall impact that figure has on the price of housing in Australia is marginal.
"It is difficult to directly attribute price growth in Sydney to foreign investors alone," the Treasury report said.
"Other factors, such as the relatively low number of building approvals, commencements, and completions in the late 2000's are potential longer-term drivers of the recent price growth in Sydney,"
"Foreign demand has accounted for only a small proportion of the increase in property prices in recent years."
Ken Morrison, chief executive of the Property Council of Australia, told Xinhua on Monday that any changes to the property rules for foreign investors would be ignoring the real issues that face the property market in Australia.
"It is completely the wrong focus. What the government should be doing is looking at the real drivers behind poor rates of housing affordability, and this issue isn't one of them," Morrison said.
"The reality is that foreign investment is needed to get projects started faster, there are very few projects that have more than 50 percent of foreign buyers in them anyway."
Morrison warns that any changes to the laws, could also have further reaching economic consequences, and he is concerned about the "signals" Australia is sending to the global investment market.
"We do have to be careful about the signals we send to the outside world," Morrison said.
"We have a policy framework that is all about ensuring foreign investors can only buy into newly established housing, that pulls through the housing supply we need."
The chief executive of Chinese international real estate website Juwai.com, Charles Pittar, explained to Xinhua that negative gearing, and not foreign investment, is the true cause for concern for Australians looking to enter the property market.
"Until the federal government ends negative gearing, there isn't anything of substance that can be done for first home buyers, apart from encouraging the foreign investment that makes new construction possible," Pittar said.
"Investors, and especially foreign investors, have made possible new projects that have added hundreds of millions of dollars, and tens of thousands of jobs to the local economy."
