World Economy

Australia Stiffens Penalties for Foreign Investors

Australia Stiffens Penalties for Foreign InvestorsAustralia Stiffens Penalties for Foreign Investors

The Australian government has toughened penalties to stop foreign investors from illegally buying homes in the country’s overheating property market, saying those breaching investment laws would face three-year jail terms and fines of as much as 637,500 Australian dollars ($500,400).

The bid to crack down on money illegally flowing into Australian real estate comes amid growing public concern that wealthy Asian investors are bidding up prices, making the country’s property market increasingly unaffordable. House prices in Sydney alone have risen 14.5% in the year to April, according to property-data provider Corelogic RP Data, Yahoo News reported.

While stressing the government remained “pro-business and pro-investment,” Prime Minister Tony Abbott said at a press conference Saturday that investment rules needed to ensure “that the foreign investment we need really is in Australia’s national interest.”

“There is no doubt that if we have foreigners illegally coming into the existing residential property market, that is driving up prices,” Abbott said. “What we want to do is to ensure that illegal foreign investment is not unnecessarily driving up prices.”

The government said the new rules, including a new application fee, would be enforced from the end of the year. Australia allows foreigners to only buy residential property in development and excludes them from purchasing homes already built, but signs are mounting that the current system is fraught.