Dispelling Perth’s foreign buyer myths

According to the Australian Taxation Office (ATO), foreign buyers claimed $300 million worth of property in Western Australia over the first three quarters of the 2022–23 financial year.

“It’s a great headline, isn’t it?” Ms Hart posited. “It fuels the conversation about the usual ‘villains’ forcing people out of the market,” she added.

Even if the villain isn’t always foreign buyers, she noted how at different times Boomers and eastern state investors have been made the Western Australian market scapegoats – the wider society always hunts someone to “hold accountable for the tight conditions”.

While the data from the ATO paints a picture of heavy foreign investment into the state’s property market, Ms Hart reveals the true picture.

“Landgate data shows the value of property sales in WA was nearly $30 billion in the first three quarters of last financial year,” she explained.

So, what does this data tell about the state of foreign investment in Western Australia? The $300 million worth of property purchased over the opening 75 per cent of the 2022–23 financial year accounted for 1 per cent of the state’s total value of sales.

“First myth busted,” Ms Hart exclaimed, adding foreign investors “are not buying significant volumes of property and, at such a small proportion of total sales, neither are they pushing prices out of reach”.

However, busting a single myth doesn’t draw this episode to its conclusion. Ms Hart honed in on a second myth surrounding foreign investment in Western Australia – one related to the notion that this section of buyers are “snapping up homes” across the state.

“Foreign buyers actually have a lot of limitations placed on what they can buy,” she outlined. “This is to ensure that their investment boosts housing supply, which serves federal and state government objectives.”

At a national cabinet meeting earlier this month, state and territory leaders, alongside Prime Minister Anthony Albanese, agreed to increase the target of “well-located homes” to be built over five years from 1 July 2024 from 1 million to 1.2 million, with the Commonwealth government pledging $3 billion to a ‘New Home Bonus’ scheme to incentivise the completion of this project.

Detailing some of the limitations placed on foreign buyers hunting their slice of Australia, Ms Hart explained they must “apply to the Foreign Investment Review Board when buying, and are limited to new dwellings, with purchases in new projects capped at 50 per cent of the residences available to ensure local residents can also buy into the development”.

Foreign buyers wishing to purchase an established dwelling are only able to do so for “redevelopment purposes” while they can only snap up vacant land for residential dwelling development – with the development required to be completed within four years.

On top of strict limitations placed on their purchasing power, Ms Hart highlighted foreign buyers must also pay an application fee “which rises as the cost of the property increases”.

Additional financial provisions clamped onto include an additional transfer duty of 7 per cent in Western Australia while also facing an annual charge if they leave their property vacant for at least six months of the year.

“There are fines for non-compliance,” she added.

Ms Hart spelled out that, contrary to popular belief, “foreign investors add to housing supply”.

“They also often buy in apartment developments and rent the homes out, which the rental market needs,” she said. “Without their investment in these projects, many wouldn’t get off the ground.”

She concluded that “while stories about foreign buyers’ expenditure make great headlines, it’s worth digging a little deeper to see what the situation actually is”.