CANBERRA, March 2-- With foreign investment laws in Australia set for a mighty shake-up, the flood of Chinese investment into Australia's leafy green suburban real estate could soon slow to a trickle.

That's the fear of local property agents who say recent changes flagged by the Australian government could scare Asian buyers away.

Under the new guidelines announced by the government last week, overseas investors will be required to pay a minimum 3,900 U.S. dollar application fee for residential properties which sell for less than 1 million Australian dollars (785,000 U.S. dollars).

More expensive properties will command fees of 7,800 U.S. dollars for every extra million dollars in the purchase price. So, for example, a property worth 5 million dollars (3.925 million U.S. dollars) would attract fees of 35,100 U.S. dollars.

The government has introduced the move in reaction to growing dissatisfaction among local property owners and buyers, who claim they're being outbid by foreign investors, sometimes by tens of thousands above the asking price and sometimes before an auction is even carried out.

Under current foreign investment laws, overseas buyers are not being screened and do not pay fees to buy Australian property.

A spokesman for a leading Chinese-based property aggregator said the government's new fee structure had caught the industry by surprise and could drive thousands of those potential Chinese investors away.

Dave Platter, global public relations and communications director for Juwai.com, a company which sources international property for Chinese investors, told Xinhua that clients he had spoken to were upset at news they could be paying hefty sums just to apply to buy a house in Australia.

"People think it's a bit unfair and they wonder why it's happening," Platter said.

"We think that investors aiming to spend under 1.5 million dollars (1.17 million U.S. dollars) will be encouraged to look somewhere else."

"It will be a real disincentive and there will be a lot of uncertainty. They'll know they have to pay the fee but they don't know if they'll get the property. That's not the position most people want to get in to."

Mandy Lee, a Melbourne-based real estate agent specializing in international investments, was just as critical, saying the government might think the fee is small, but international buyers won't be pleased by the idea of handing over money just for privilege of trying to invest in Australian property.

"Some buyers will definitely be scared off," she told Xinhua.

Chinese investment in Australian real estate has almost doubled in the past five years. Juwai.com said Chinese buyers spent 5.3 billion U.S. dollars on Australian residential property in 2013, up from 4.2 billion U.S. dollars in 2012, which in turn was up from 2.4 billion U.S. dollars recorded in 2009-10.

The company estimated that 63 million Chinese people had enough wealth to secure overseas property, almost three times the Australian population, and Australia was one of the top destinations for those looking to invest.

Platter said he was concerned how the new laws would affect the Australian economy.

"We think the proposed changes are a bad idea from Australia's point of view. They're likely to discourage a lot of buyers at the 1.5 million dollars (1.17 million U.S. dollars) and below," Platter said.

"Those are precisely the buyers who make it possible for developers to create jobs in making houses, like building and construction."

Lee also said the broader economy would suffer as a result of the changes.

"I think maybe next year the government will see the Australian economy drop," she said.

"At the moment people are purchasing property in Australia so that they can study here, or send their children here to study."

Currently, more than 20 percent of all international students coming into Australia are from China.

Lee fears this number could fall sharply, dragging other parts of the economy down with it.

"The government think this fee is a small amount, but on the other side it could turn into a big loss," she said.

"We're going to see a loss of overseas buyers and investors."

Platter said the market for Chinese buyers in the lower range will drop dramatically if the current plan goes ahead.

"In the half million to 2 million range (390,000 to 1.56 million U.S. dollars), a 5,000 up to 15,000 dollars fee (3,900 to 11,700 U.S. dollars), regardless or not if you get the property is a big disincentive.

"Hopefully the government can take some of the advice it has been given and make some improvements to its proposals."

On Sunday, Federal Assistant Treasurer Josh Frydenberg appeared to do just that, telling the Australian Broadcasting Corporation that the government was still working out the finer details of the changes, with the most likely outcome resulting in a refund of the application fee for bidders who were unsuccessful.

This would be better news for investors who were initially under the impression that application fees would be non-refundable, but the application process -- and its attendant red tape -- could still take its toll on would-be investor numbers.

So while the government has listened to the growing voice of discontent among the Australian electorate -- that Asian buyers are invading suburban real estate markets and forcing up house prices -- the move to placate them could result in the unintended consequence of damaging the economy.