Australia's new investment laws to drive away Chinese home buyers

A car drives past a residential block for sale on the outskirts of Mackay city, Queensland state, Australia on June 14, 2013. [Photo/IC]

CANBERRA -- With foreign investment laws in Australia set for a mighty shake-up, the flood of Chinese investment into Australia's leafy green suburban real estate could soon slow to a trickle.

That's the fear of local property agents who say recent changes flagged by the Australian government could scare Asian buyers away.

Under the new guidelines announced by the government last week, overseas investors will be required to pay a minimum $3,900 application fee for residential properties which sell for less than A$1 million ($785,000).

More expensive properties will command fees of $7,800 for every extra million dollars in the purchase price. So, for example, a property worth A$5 million ($3.925 million) would attract fees of A$35,100.

The government has introduced the move in reaction to growing dissatisfaction among local property owners and buyers, who claim they're being outbid by foreign investors, sometimes by tens of thousands above the asking price and sometimes before an auction is even carried out.

Under current foreign investment laws, overseas buyers are not being screened and do not pay fees to buy Australian property.

A spokesman for a leading Chinese-based property aggregator said the government's new fee structure had caught the industry by surprise and could drive thousands of those potential Chinese investors away.

Dave Platter, global public relations and communications director for Juwai.com, a company which sources international property for Chinese investors, told Xinhua that clients he had spoken to were upset at news they could be paying hefty sums just to apply to buy a house in Australia.

"People think it's a bit unfair and they wonder why it's happening," Platter said.