The end of the Golden Visa? Potential impacts on Australian property markets

WITH PRESTON ROWE PATERSON CEO, GREG SUGARS

Over the years I have closely observed the interplay between immigration policies and property markets in Australia.

Recent rumours and press articles (The Australian, January 22) about the potential cessation or suspension of the Significant Investor Visa (SIV) program (sometimes referred to as a “Golden Visa”), have stirred discussions within our business here at Preston Rowe Paterson. This opinion piece aims to unpack the potential impacts of such a move on Australian property markets.

• Background of the SIV

The Significant Investor Visa, introduced in 2012, has been a pathway for foreign high-net-worth individuals to gain residency in Australia, contingent upon investing a significant amount in the country, often including property investments.

This program has been particularly attractive to overseas investors, predominantly from Asia, and has had a notable reported impact on the Australian property market.

For clarity’s sake, the Business Innovation and Investment (Permanent) visa (subclass 888) Significant Investor stream Visa is still available for application on the government website.

• Potential effects on property markets

High-end residential market: Anecdotally the SIV has been instrumental in driving pockets demand in the high-end residential property market, especially in major cities like Sydney and Melbourne. The cessation of the SIV could lead to a reduction in demand in this sector, potentially causing a stabilisation or slight decline in property values in these select premium segments

Commercial and industrial property: SIV investors often diversify their portfolios with commercial and industrial properties. A halt to the SIV could slow down the influx of foreign capital in these markets, impacting the demand and value growth, particularly in areas that have seen significant foreign investment

Development projects: SIV holders are well known to invest in property development projects. The cessation might lead to a decrease in funding for new developments, affecting the supply chain and potentially slowing the pace of new construction projects

The end of speculative investment: There has been a lot of activity in Urban Growth sectors by speculative investors, many of whom have been SIV holders. In particular land banking and on selling of these parcels at highly inflated prices to other SIV aspirants has already seen significant distortion in these markets, and

Rural and agribusiness property market: Rural and agribusiness property markets have not traditionally attracted SIV holders.

• Broader economic implications

Beyond property markets, the cessation of the SIV could have wider economic implications. The reduction in foreign investment could impact job creation in the construction and real estate sectors and might also have a downstream effect on retail and other service industries.

• Conclusion

While the cessation of the SIV is still a rumour, it is crucial for stakeholders in the Australian property market to consider the effects of any likely changes. Diversification of investment portfolios and strategies to attract different investor segments might become necessary.

As property market experts, we at PRP are committed to providing our clients with the latest insights and advice to navigate these changes. We will continue to monitor the situation closely and provide updates as more information becomes available.

I am genuinely interested in your thoughts on this issue.