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House prices are unlikely to go up after change in law was announced on Friday 23rd April 2010
  Fancy noticing real estate agents sign boards going up on Monday on your street and "Sold" sign on them on Tuesday and property selling higher than the asking price. Chances are that the property was sold to a foreigner.
However after Friday 23rd April 2010 this frenzy will come to an end after new legislation was announced by Senator Nick Sherry Assistant Treasurer.
About 18 months back, legislation was amended to make it easier for foreigners to purchase residential property in Australia under the backdrop of looming recession. Basically, the amendment was to remove the need to get approval from Foreign Investment Review Board before a vendor could sell to a foreigner.
Recently Australia is seen by foreigners as a safe investment and the only country where interest rates have risen to the current levels and generally considered to have missed the GFC which has crippled residential market especially in USA.
 Most property investors think that Australian economy, which heavily relies on natural resources for its GDP growth, would be the first one to come out of the property dip and going forward, prices would rise earlier then other countries.
This confidence in Australian property market has shown a silent but strong interest in residential property and most property Guru's have put this interest from buyers from overseas particularly China.
Most of the purchasing activity is from temporary entrants, such us students being financed by rich parents and by foreigners on other visa classes.
Prices have risen in most metropolitan cities, in some suburbs more than 10% in the past 18 months, since the legislation was amended. In senators Sherry's own words  "ongoing strength of the Australian economy, property market, which has made Australia a very attractive place to invest and in this case with the factor of international demand in investment, it is important that in this case priority is (should be) given to Australian investors in real estate rather than the foreign investors, temporary or otherwise".
It seems that the Government is trying to curb overseas demand, so that Australian are not priced out of the market, the three changes in legislation announced are:
 1 ) There will be a requirement for pre-screening; notification to the Foreign Investment Review Board for every purchase
2 ) When a temporary entrant leaves the country they will now be required to sell that property back into the Australia housing market.
3 ) In the event of vacant land overseas purchaser will be required to build within 24 months and if they don't they will then have to sell the land back in to the market.
To read the first announcement by senator Nick Sherry click here at a news conference at Treasury place Gardens in Melbourne on 24th April 2010
To read today's announcement click here on radio 4BC
Manoj Abichandani SSA SSAud
SMSF Specialist Advisor
SMSF Specialist Auditor
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