Australians can expect to pay even more for housing if the GST is raised, with experts warning of a “devastating” impact on housing affordability, according to news.com.au. And would-be homeowners can expect a double whammy if the proposal goes ahead, with mortgages set to become more expensive as the big banks scramble to meet new lending rules.
Urban Development Institute of Australia vice president Michael Corcoran said with housing prices at “record levels” increasing the number of new homes built was essential to solving the affordability crisis.
“I think everyone including the Reserve Bank agrees that the only long term solution is to increase the supply of new houses and apartments,” Corcoran said.
“If the GST increase only applies to new houses and apartments, prices must go up. And that will have a spill-over effect to established housing.”
Housing Industry Association chief economist Harley Dale said if GST applied to new housing hit 15 per cent, the impact on the sector would be profound.
“It’s a bit of a no-brainer,” Dale said, predicting a “sharp decline” in construction. “There would be a significant reduction of new housing from both an investor and owner-occupier perspective,” he said.
Foreign investors playing big part in real estate
The Chinese aren’t the only ones fuelling Australia’s property boom, with expats forming a powerful new wave of buyers as they cash in on opportunistic foreign property gains and bring their money home, according to an article from the Australian Financial Review.
Local Australians are benefiting, too, as they seek to repatriate funds invested in distressed US property zones. A confluence of factors has these investors laughing all the way to the bank – they bought low, are selling high and are now reaping impressive foreign exchange gains in converting their currencies to weak Australian dollars.
The most successful of these, says senior alliance manager at OzForex Jonathan Sermon, bought US property in the wake of the global financial crisis – particularly in places like Atlanta, Florida and Las Vegas where foreclosures were common and house prices were at record lows.
“It started in 2007 and matured in 2010 and 2011 until we saw the Aussie start to decrease,” Sermon was quoted in the Financial Review. Since then, buyers have enjoyed solid and rising rental income and strong capital growth.
Figures from the US National Association of Realtors show the median house price grew 11.5 per cent in 2013 and 5.7 per cent in 2014.
Perth brokers banned for $315,000 fraud
ASIC has permanently banned two Perth-based finance brokers for committing motor vehicle finance fraud worth over $315,000.
Eric-John Larry Pryor and Peter Lachlan McDonald of Bertram, Western Australia, were banned after ASIC found that they had, independently and jointly, engaged in dishonest and misleading conduct when brokering motor vehicle financing for twelve clients between May 2012 and February 2013 whilst employed as finance brokers for Get Approved Finance of Victoria Park.
Pryor and McDonald misled vulnerable clients with poor credit histories to believe they would be approved for vehicle finance if their loan applications were supported by guarantors. The pair then prepared loan applications solely in the names of the proposed guarantors without those persons’ knowledge or consent. As a result of this conduct, the lender financed over $315,000 in automotive loans (with interest $470,000) which it otherwise was unlikely to have approved.
ASIC also found that Pryor and McDonald personally profited from the sale of vehicles to three clients in circumstances where they had sourced the vehicle, artificially inflated the sales price and failed to disclose their interests in the transaction.
The pair have also been convicted of fabricating insurance policies in relation to five loans so as to mislead the lender about the existence of mandatory comprehensive insurance policies being in place for those clients.