Paying $15 million for a penthouse, even one with views of both the Sydney Harbour Bridge and Opera House from the outdoor hot tub, is feeling very 2025 as the slump in houses became a national phenomenon this week.

Sydney and Melbourne are down more than 5 per cent from their peaks, according to property data group Cotality, while the property booms in Brisbane, Adelaide and Perth are now deflating as well.

But the buyers of the luxury penthouse in Sydney’s historic The Rocks district must have felt they got a bargain with its purchase last year, given the same property changed hands for $17.5 million in 2018.

But the real winner appears to be the buyer of the sub-penthouse who picked it up for $9.4 million a few months later. It had changed hands for $14 million in 2019.

Both properties had been acquired at these questionably high prices by the same party, but the original owners had a lot more to grumble about than the multimillion dollar losses on the two transactions.

In 2020, the two properties were put under a restraining order by the AFP-led Criminal Assets Confiscation Taskforce (CACT) - a team set up to confiscate the illegal wealth and assets of organised crime syndicates.

CACT successfully seized the properties in 2024 as a result of Operation Cabestro, a Melbourne-based investigation into large-scale fraud involving imported alcohol which defrauded federal coffers of hundreds of millions of dollars.

The multimillion-dollar losses on the sales appear to confirm that money launderers are not that picky about the price, as long as their ill-gotten gains get converted into respectable wealth - and potentially with a capital gain to boot.

To give an idea of how popular money is with our criminal class, since 2020, police have frozen about $1.2 billion in criminal assets. Two-thirds of that is related to property.

Not any more. The criminal world’s free ride from rising property prices has been cruelled - as it has for the rest of us - via higher interest rates and changes to the tax treatment of capital gains.

The tantalising question is, what additional downward pressure has there been on housing prices from the changes to anti-money laundering provisions last month which means tens of billions of dollars in criminal proceeds now have to find a new home?

On July 1, real estate agents, accountants and lawyers came under Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act for the first time.

It means these parties will now have to know who their buyers and sellers are in any transaction and report any suspicious activity to police. A buyer can no longer just roll up to the selling agent with a boot load of cash and scant identification, no questions asked.

Australia’s financial crimes watchdog, AUSTRAC is in no doubt what impact this will have on house prices.

AUSTRAC boss Brendan Thomas has said previously that it pushes up house prices and takes “property that would otherwise have been purchased by a hard-working Australian”.

The Melbourne proceeds of crime that ended up in a Sydney penthouse will be much harder to carry out in this new environment, Thomas says.

“We expect the reforms will bring more cases like this to light and help uncover money laundering in real estate transactions, that we don’t currently see, by bringing suspicious activity to our attention earlier,” he said.

But not everyone thinks it will have an impact on your average home price.

“From a price perspective, we don’t expect a major impact - property values are still driven by supply, demand and interest rates,” Dr Nicola Powell, chief economist at real estate portal Domain, says.

“What these reforms will do is lift transparency and add more rigour, particularly in higher-value or more complex transactions,” she says.

AMP’s chief economist Shane Oliver says there doesn’t appear to be any reliable estimates of the value of money laundered through property, but it looks to be less than one per cent of transactions.

He said it’s likely biased towards the upper end of the property market, which appears to be under most pressure at present from rate hikes and the tax hike on investors.

“So I suspect on its own the tougher regulations would only have a very minor impact, but coming at a time when there is already downward pressure on property prices, they may have the impact of magnifying the weakness particularly for upper end property and suburbs,” he said.

Reports from Canada, which also had a flood of criminal money funnelled through its Pacific Rim property hot spots like Vancouver, also equivocated on the potential impact.

While an earlier study from 2019 found that criminal money may have raised prices in British Columbia by 5 per cent, a 2022 Cullen Commission report found that money laundering is not a significant cause of housing affordability issues or rising real estate prices.

“While the impact of money laundering and anti-money laundering measures on real estate prices is something that would benefit from further study, I am unable to conclude that money laundering is a significant cause of housing affordability in the residential real estate market,” Cullen concluded.

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