Morning Briefing: Foreign lending crackdown won't damage property market

The bank crackdown on foreign lending will impact the Australian property market, but its effects won’t be too far-reaching, a prominent broker says... Guilty plea over dodgy SMSF property deals...

Morning Briefing: Foreign lending crackdown won't damage property market
Foreign lending crackdown won't damage property market
The bank crackdown on foreign lending will impact the Australian property market, but its effects won’t be too far-reaching, a prominent broker has said.


Speaking to MPA's sister publication, Australian BrokerRen Wong, the CEO of N1 Loans, said the bank restrictions on lending to foreign borrowers or excluding foreign-sourced income from mortgage applications will only materially affect one small segment of the Australian property market.  

“As per the banks’ comments, foreign borrowing only made up a minority portion of the loan book. The restriction to lend to foreign borrowers will definitely impact the real estate market, but will likely be limited only to off the plan properties, which in itself is a minority market of the overall real estate industry,” Wong said.

Foreign investment has often been seen as an important pillar propping up the Australian housing market. According to the Foreign Investment Review Board’s latest annual report, approved investment in real estate – comprising commercial and residential proposals – increased by 30% in 2014-15, reaching $96.9 billion. Foreign investment in residential real estate specifically increased by 75% in 2014-15.

As a result, the bank crackdown has prompted concerns that it could deflate the Australian property market.

However, Wong says while N1 has had to turn away a surge in enquiries about foreign investment, he said the ASX-listed firm has not noticed a material impact to demand.

“We did receive a surge of phone enquiries about overseas lending but we have told them of the policy change,” he said.

“The Australian housing market is driven by supply and demand… Given the strong pipeline in pre-approvals, I believe the overall real estate market is still sustainably healthy." 

Guilty plea over dodgy SMSF property deals
A Victorian man has pleaded guilty to six charges brought against him following an Australian Securities & Investment Commission Investigation into self-managed superannuation fund (SMSF) property investments.

Barry Patrick, 73, of Sunbury, Victoria has pleaded guilty in the County Court of Victoria this week to three charges of obtaining property by deception, two charges of obtaining a financial advantage by deception and one charge of carrying on a financial services business without a licence.   

Five additional charges were withdrawn by the prosecution as a result of the guilty plea.

The ASIC investigation, carried out by the regulator’s SMSF Taskforce found that between 2007 and 2010, Patrick illegally obtained more than $600,000 from 14 investors.

To obtain the funds Patrick persuaded investors to refinance their homes and/or establish self-managed superannuation funds (SMSF) and then invest their SMSF in proposed property developments.
(Your Investment Property)

 

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