Australian Property Market Rises Amidst Dirty Money and Rental Crisis

Times Viewed: 20

As house prices continue to soar in cities like Sydney, Brisbane, and Melbourne, two disturbing trends emerge. First, the Australian real estate industry faces allegations of being a haven for money laundering. Second, there’s a growing consensus that Australia’s rental system is in desperate need of an overhaul.

Dirty Money and Soaring Prices

Rachel Ward, in a recent piece, pointed out concerns raised by Transparency International Australia. The anti-corruption group suggests that the country’s real estate sector is a magnet for illicit funds which could be contributing to the inflated property prices.

According to Clancy Moore, the Chief Executive of Transparency International Australia, Australia’s real estate sector is “the go-to destination for criminals to park their illicit money”. Moore further mentions that “Australia’s existing anti-money laundering rules were among the weakest in the world”.

Despite these concerns, Real Estate Institute of Australia’s president, Hayden Groves, argued that the principal reason behind the property price hike is a severe shortage of housing supply. “The Australian Federal Police and the Australian Government currently can’t demonstrate any evidenced-based link between money laundering and Australian property values,” Mr. Groves said.

Australia’s Broken Rental Market

Casey Briggs reported on the dismal state of Australia’s rental market2. Stephen Papadopolous, a renter for 20 years, had to move back in with his parents after his landlord sold his apartment in Sydney. After an extensive search, he found that prices for a one-bedroom apartment had soared to over $600 a week.

Eliza Owen, CoreLogic’s head of residential research, and Leo Patterson Ross from the Tenants’ Union of New South Wales echoed the sentiment, with Patterson Ross describing the market as “broken”. Owen observed that rental pressures will likely ease up around 2024.

However, the rental woes cannot merely be attributed to the pandemic. According to Briggs, the majority of rental properties are owned by landlords with only one investment property2. This indicates a shift in the rental market’s structure, suggesting that the previous cushions against market shocks have eroded.

Australia’s property market continues to face significant challenges. With allegations of money laundering on one hand and a rental crisis on the other, the federal government and stakeholders must take urgent action to address these issues and provide relief to citizens.

References:

“Australian property market: Fears dirty money could contribute to house price rises with costs soaring in Sydney, Brisbane and Melbourne” by Rachel Ward. https://www.dailymail.co.uk/news/article-12451395/Australian-property-market-Fears-dirty-money-contribute-house-price-rises-costs-soaring-Sydney-Brisbane-Melbourne.html 

“What broke the rental market?” by Casey Briggs. https://www.abc.net.au/news/2023-08-26/how-the-rental-market-broke-can-it-be-fixed/102767494