People live on land and in houses, they cannot live in a lump of iron ore. OS investment in mines does not increase the price of the products locally, if anything it reduces them, creates jobs and tax revenue for the country.
Allowing overseas investors to buy limited housing stock and leave it idle and empty whilst pushing up the prices for those who need to work near these areas, and indeed requiring people to borrow beyond their means, which ends up damaging our economy, is wrong IMO. The thought of this induces a foul taste in my mouth.
But it is great for those who have caught a ride on the tail of the resultant capital gains. As speculated though, most of these investors are unlikely to be stupid, and if the negative trend sets in, not only will the investment activity dry up, but the offloading will begin in earnest IMO. I have seen a few signs of this trend myself looking at the recent increase in the number of (usually empty) properties marketed by Asian agents on the north shore of Sydney. A common theme is bad marketing, that is bad photographs, collections of cliche descriptions that do not make a lot of sense but are quite amusing, along with poor grammar and spelling. How they can sell anything with these issues is beyond me.
The FIRB has rules that attempt to prevent the above scenario, however according to that journalist who tried to get some figures out of the FIRB about how many approvals and rejections they had issued for resi property investments by foreigners, they are not bothering to do their job, and the laws have as many loopholes as a macramé scarf. He was implying that in this matter, the govt likes to turn a blind eye, as property prices keep rising, capital gains tax keeps rolling in along with the stamp duty cheques.
Pity it has caught up with them anyway. There won't be many CGT events occurring with property investments for some time IMO. Massive crash in gov revenue, brought about by their own short term greed and stupidity. Stamp duty revenue also would be way down. There is nothing they can do to conjure up the greatest fools of all, as they have run out of money, and the income streams are running dry.
Looking at how this property lark has played out, at best, the days of above average capital gains are gone for a very long time.
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