{
  "title": "Falling Out of Favor",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis",
  "canonical": "https://www.imf.org/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis",
  "overlayPath": "/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis/index.md",
  "summary": "Some countries are turning against foreign buyers as soaring property prices become political",
  "sections": [
    {
      "heading": "Overview: shifting attitudes toward foreign residential buyers",
      "content": "- Some countries are turning against foreign buyers as soaring property prices become political.\n- “Foreign ownership is not a big part of the mess,” said Alan Kohler, author of The Great Divide: Australia’s Housing Mess and How to Fix It. “There isn’t much foreign ownership of empty houses. The common thread may be [high] immigration versus low construction.”\n- Knight Frank’s 2024 Wealth Report: as 70 countries held elections in 2024, wealthy people seeking properties abroad faced a global landscape of restrictions on foreign buyers and holiday rentals, planning regulations, and property taxes."
    },
    {
      "heading": "Case study — Australia (Kensington Road, Melbourne)",
      "content": "- High-end example: 9 Kensington Road, built in 1890, four-bedroom Victorian terrace house priced at $A 8 million (US$5.4 million).\n- Nearby example: apartment at No. 10 sold for $A 855,000, about $A 70,000 above the top asking price; buyer purchased it for his daughter.\n- Housing finance and affordability indicators (ANZ Bank data and related findings):\n  - The proportion of income required to service a new 25-year mortgage is at a record high of 50.3 percent.\n  - It takes 10.6 years on average to save for a down payment on a home.\n- Demographics and migration:\n  - Australia’s population hit 27.1 million on March 31, 2024, according to the Centre for Population.\n  - Annual population growth slowed from a peak of 2.6 percent in July–September 2023.\n  - Net overseas migration was 510,000 in the year ending March 31, 2024, and 134,000 in January–March alone.\n  - More than 80 percent of new arrivals to Australia are renters (ANZ estimate).\n- Policy responses in Australia:\n  - Government tripled fees for foreigners to buy existing houses.\n  - Government doubled taxes for those who leave dwellings vacant.\n  - The government imposed a cap on international student numbers in August (presented as a measure to alleviate rental market pressure).\n- Market behavior:\n  - “Bank of Mum and Dad” dynamics: parents using equity to help younger buyers—illustrated by the buyer at No. 10.\n  - Jones Lang LaSalle Q2 2024: premium suburbs close to Sydney’s CBD experiencing strong demand for luxury boutique projects driven by “downsizers.”\n  - Kay & Burton (Ross Savas and Jamie Mi) report continued demand in the luxury segment; Jamie Mi: “I haven’t seen a significant drop in confidence among foreign buyers. Top-end buyers are less concerned with additional fees or taxes and remain focused on securing high-value assets.”"
    },
    {
      "heading": "Global policy shifts and golden visa programs",
      "content": "- Golden visa programs (residency or citizenship in return for investment, commonly in property) expanded after the global financial crisis but are now under scrutiny:\n  - Greece launched its golden visa program in 2013.\n  - Portugal offers arrangements for “non-habitual residents,” who are taxed at lower rates.\n  - Spain announced in April this year that it would wind down its program.\n  - The European Commission considers citizenship-by-investment plans illegal under EU law and has taken Malta to the Court of Justice and challenged its program.\n  - New Zealand passed a law preventing foreigners from buying some residential properties in 2018.\n  - Canada’s two-year ban on foreign ownership, due to end January 1, 2025, has been extended to 2027.\n  - Singapore doubled the stamp tax paid by foreigners to 60 percent to ease housing pressures.\n  - Dubai is offering residency in the United Arab Emirates to those who invest in real estate, are entrepreneurs, or have specialized skills (such as doctors or software engineers)."
    },
    {
      "heading": "Drivers of housing affordability stress",
      "content": "- Multiple factors beyond foreign buyers:\n  - High immigration and net overseas migration increasing demand for housing.\n  - Low construction and constrained supply driven by zoning and planning restrictions.\n  - Rising public debt and diminished housing affordability in advanced economies, creating political scrutiny of wealth and property.\n  - Intergenerational equity effects: homeowners who benefited from decades of house appreciation provide family support to younger buyers, amplifying price dynamics in premium segments."
    },
    {
      "heading": "IMF and expert recommendations / policy implications",
      "content": "- IMF on Australia: a comprehensive approach is needed to address the significant housing supply shortfall, including:\n  - More construction workers.\n  - Relaxed zoning and planning restrictions.\n  - Re-evaluation of property taxes (including tax concessions to investors).\n- Policy trade-offs and political economy:\n  - As public debt escalates and housing affordability diminishes across advanced economies, policymakers are poised to scrutinize wealth and property more intensely, affecting strategic considerations for ultra-high-net-worth individuals (Kate Everett-Allen, Knight Frank).\n  - Countries are diverging: some tightening restrictions on foreign buyers and golden visa incentives, while others continue to offer residency tied to real estate investment.\n\nSource: Falling Out of Favor, F&D Magazine, MARIA PETRAKIS, December 2024.\n\n---\n\n Content in this bundle\n\n- Rocky Relations\n  - Rocky Relations (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Rocky Relations (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis/index.md)",
    "[Structured JSON version](/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis/index.json)",
    "[Bundle manifest](/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis/bundle-manifest.json)",
    "Authors: MARIA PETRAKIS",
    "Published: December 3, 2024",
    "Some countries are turning against foreign buyers as soaring property prices become political.",
    "“Foreign ownership is not a big part of the mess,” said Alan Kohler, author of The Great Divide: Australia’s Housing Mess and How to Fix It. “There isn’t much foreign ownership of empty houses. The common thread may be [high] immigration versus low construction.”",
    "Knight Frank’s 2024 Wealth Report: as 70 countries held elections in 2024, wealthy people seeking properties abroad faced a global landscape of restrictions on foreign buyers and holiday rentals, planning regulations, and property taxes.",
    "High-end example: 9 Kensington Road, built in 1890, four-bedroom Victorian terrace house priced at $A 8 million (US$5.4 million).",
    "Nearby example: apartment at No. 10 sold for $A 855,000, about $A 70,000 above the top asking price; buyer purchased it for his daughter.",
    "Housing finance and affordability indicators (ANZ Bank data and related findings):",
    "Demographics and migration:",
    "Policy responses in Australia:",
    "Market behavior:",
    "Golden visa programs (residency or citizenship in return for investment, commonly in property) expanded after the global financial crisis but are now under scrutiny:",
    "Multiple factors beyond foreign buyers:",
    "IMF on Australia: a comprehensive approach is needed to address the significant housing supply shortfall, including:",
    "Policy trade-offs and political economy:",
    "**Rocky Relations**"
  ],
  "related": [
    {
      "title": "Rocky Relations",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2024/12/petrakis.pdf",
      "summary": {
        "path": "/-/media/files/publications/fandd/article/2024/12/petrakis.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/fandd/article/2024/12/petrakis.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis/index.md",
    "json": "/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis/index.json",
    "bundleManifest": "/en/publications/fandd/issues/2024/12/falling-out-of-favor-maria-petrakis/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-15T19:34:18.680Z"
}