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Why millionaires migrate to Australia? - featured image
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Why millionaires migrate to Australia?

Australia is once again the top spot for attracting the most net millionaires, and there's a major reason why they're all choosing to come here.

New information from the Australian Treasury, real estate experts, and PropTrack reveals a strong increase in international interest in Australian homes.

In fact, NAB’s latest Residential Property Survey of real estate professionals reported that the proportion of Australian homes sold to foreign buyers has increased sharply since Australia’s borders were reopened in late 2021:

Foreign Residential Demand

Meanwhile, overseas searches on realestate.com.au, reported by PropTrack, also show that foreign buyer interest in Australian housing has hit record highs, led by China:

Annual Change In Buy And Rent Search Volumes From Overseas Property Seekers

On the other hand, the Australian Treasury reported that approvals for foreign purchases of Australian homes increased by 40 per cent in the last quarter versus the previous year, with buyers from mainland China, Hong Kong, Taiwan, and Vietnam leading the way.

Further, a recent map by The Visual Capitalist on the migration patterns of the world’s millionaires forecasts that Australia will this year experience the highest influx of millionaire migrants (+5,200), while China will suffer the greatest loss (-13,500):

Millionaire Migration 2023

Why did this happen?

According to Leith van Onselen,co-founder of MacroBusiness.com.au and Chief Economist at the MB Fund and MB Super in an insightful article in news.com.au, Australian housing has become a hotspot for foreign buyers due to a combination of various factors coming together.

First, in 2009, the Rudd Government allowed temporary migrants to buy existing homes, which led to a surge in temporary migration, especially among international students, mainly from China. This, in turn, increased the demand for Australian homes.

Temporary Visas On Issue Excluding Visitors

Source: Macrobusiness.com.au 

Second, according to van Onselen, Australia's lax anti-money laundering (AML) laws have made its housing market a preferred channel for laundering illicit funds.

In 2003, Australia agreed to adopt global AML rules targeting real estate gatekeepers like accountants, lawyers, and real estate agents, but these regulations have been consistently delayed due to resistance from these industries.

The Financial Action Taskforce (FATF) warned in 2015 and again before the Covid pandemic that significant sums, mostly from China, were being laundered through Australian residential housing.

Despite these warnings, regulatory measures have not been implemented, and it is estimated that billions of dollars, primarily from Chinese nationals, have been laundered through Australian homes in the past two decades.

Finally, van Onselen explains, a key factor in facilitating money laundering is the 'golden ticket' visa, introduced by former Labor Treasurer Chris Bowen in 2012.

Operating for a decade with almost no rejections, 90% of successful applicants are Chinese citizens.

Over 20,000 Chinese have been approved for the Significant Investor Visa, requiring a minimum $5 million commitment.

These visas provide automatic permanent residency without the need for English proficiency.

Advocates against corruption have urged the abolishment of these visas, alleging they are exploited by corrupt officials for entry and fund laundering. Australia's Productivity Commission also recommended ending the 'golden visa' program, highlighting its role in facilitating the flow of 'dirty money' into the country.

Other developed nations have already discontinued similar programs, and when combined with Australia's weak AML rules, it has made our homes attractive for money laundering.

Closing the loopholes

Van Onselen concluded it's time to close the loopholes.

The Albanese government is once again consulting on Tranche 2 AML laws, a process that has been repeated several times.

These rules could bring over 100,000 real estate gatekeepers under AML regulation, but industry pushback has been strong, defeating previous consultations.

There's concern this may happen again, further delaying the implementation of global AML rules agreed upon by Australia in 2003.

Van Onselen believes the Albanese government needs to break this 20-year cycle, enforce Tranche 2 AML rules, and heed the Productivity Commission's recommendation to end the 'golden ticket' visa program.

Additionally, he suggests they should prevent temporary migrants from buying established Australian homes to ensure affordability for locals and prevent Australian housing from being a global magnet.

About Robert Chandra is a Property Strategist at Metropole and has an intrinsic understanding of property markets backed by many years of real estate experience. This coupled with several degrees gives him a holistic perspective with which he can diagnose clients’ circumstances and goals and formulate strategies to bridge the gap.
2 comments

I would suggest Australia hasn't done anything about it because they want the money. Money is Money, dirty or otherwise. It would be naive to think Australians are any different either, especially politicians. Just as an aside- You know in Thailand ...Read full version

1 reply

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