Top Melbourne postcodes targeted by illegal foreign investors

Melbourne’s posh suburbs used to lure the big foreign cash — now Point Cook and Werribee are among those in the sights of overseas investors illegally snapping up real estate.

Melbourne is home to 18 of the top 20 postcodes in Australia for foreign investors illegally buying real estate, new figures reveal.

Postcode 3030 — which covers Point Cook, Werribee, Derrimut and Werribee South — is the epicentre for foreign investment rorters with 58 breaches in less than three years.

MELBOURNE TOP PICK FOR CHINESE HOUSE BUYERS

CHINESE SPENDING ON AUSSIE HOMES DOWN

While it was once just the posh suburbs luring big foreign cash, suburban homes are also being illegally snapped up in suburbs including Hoppers Crossing, Tarneit, Glen Waverley, Manor Lakes, Box Hill and Sunbury.

A $3 million Canterbury mansion bought by a Chinese family, a $5 million ­Rockbank property sold to Indian nationals and a $5 million Hawthorn East home bought by a Bentley-driving Chinese businessman are among the illegal purchases.

This $3 million Canterbury mansion was bought in 2010 by a Chinese family and was later forcibly sold due to foreign investment breaches.

Despite at least 877 breaches of the country’s foreign ownership laws being uncovered in Victoria, the Australian Taxation Office has failed to land a single criminal prosecution since tough new laws came into effect more than three years ago.

Grandmothers are being used as “front men” for overseas relatives buying up real estate across Melbourne, as authorities admit some of the cases are too difficult to pursue criminal convictions.

The agency recently considered prosecuting one elderly grandmother, but decided the prospects were poor because she had “limited education, limited language skills, advanced age and other sympathetic factors”.

More than half of all breaches of foreign investment laws take place in Victoria, according to evidence provided to a parliamentary committee.

Indian nationals bought 80-120 Gray Court, Rockbank, in 2015.

Foreign Investment Review Board data shows overseas buyers were given approval to spend $11 billion on residential real estate in Victoria in 2016-17 — down from a whopping $28 billion the year before.

Realestate.com.au chief economist Nerida Conisbee said while foreign activity had fallen, interest in Melbourne property remained strong.

“The fact they’ve stopped investing isn’t because they’re not interested. They’re struggling to get finance,” she said. “They’re also concerned about the direction of the market. A lot are sitting on their hands.”

Extra taxes — notably the Victorian government increasing the foreign buyer stamp duty surcharge from 3 per cent to 7 per cent in 2016 — had also “been off-putting”, Ms Conisbee said.

In 2014, a Chinese businessman bought 6 Higham Rd in Hawthorn East. Picture: Jay Town

But Melbourne remained the Australian capital of choice for offshore investors, notably those from China, India, Hong Kong and Malaysia.

She said suburbs with universities, namely Carlton and Clayton, were particularly desirable for education-focused Asians.

Also in demand were areas offering house and land packages, such as Point Cook, as foreigners without permanent residency in Australia were generally limited to buying new homes.

While investors from the US, Malaysia, India, Canada, Singapore and China have been fined millions and forced to sell the homes, not one has been successfully prosecuted under the new law.

Since the new rules came in, there have been 144 forced sales of properties in Victoria valued at $162 million, while across the country there have been 316 forced sales, valued at $381 million.

A map of the top postcodes.

VICTORIA MOST POPULAR WITH FOREIGN BUYERS

PROPERTY RAIDERS EYE OUR CITY

Labor MP Julian Hill, the deputy chairman of the Public Accounts and Audits Committee, said it was “astonishing that there had been no prosecutions”.

“The best the ATO could do was to almost prosecute one sick grandma who doesn’t speak English and then find it all too hard,” Mr Hill said.

Treasurer Josh Frydenberg said foreign nationals who illegally bought Australian real estate were being held to account since the ATO launched the crackdown.

“The Coalition government has forced the sale of more than 300 Australian properties, worth in excess of $380 million, that were illegally acquired by foreign nationals,” he said.

Under changes to foreign investing, those … who buy real estate outside the rules lose any profit from the forced sale and are hit with a penalty of 10 per cent of the purchase price.

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