CANBERRA: Two of Australia’s biggest states are introducing new taxes on foreign property buyers amid growing public concern over the volume of Chinese money flowing into local real-estate markets and a push to boost government revenues.
New South Wales and Queensland said on Tuesday they were introducing stamp duty charges for foreign buyers of 4 per cent and 3 per cent respectively. NSW will also levy a 0.75 per cent land tax surcharge on real-estate investors from next year. In April the state of Victoria increased an existing stamp duty charges for foreign buyers of property to 7 per cent. “These new measures will ensure NSW’s property market continues to be an attractive destination for international investors while making sure that we are able to fund vital services into the future,” Gladys Berejiklian, NSW treasurer, said in a statement.
NSW estimates the new taxes will raise more than A$1bn (US$740) over four years, while Queensland estimates its move will raise almost A$100m over the same period. A surge of Chinese investment in international property over recent years has provoked a backlash, with new taxes imposed in jurisdictions including Hong Kong and Singapore.
Australia approved $24bn in Chinese property investments in 2014-15, double the previous year’s figure. Property prices, particularly in Sydney and Melbourne, have experienced a four-year boom that is focusing political attention on housing affordability and the dangers of a price bubble.
Ahead of the July 2 federal election the opposition Labor party is promising to cut tax breaks for buy-to-let investors, which it claims is creating a barrier for would-be first-time buyers. The Liberal-National coalition argues that tampering with “negative gearing” policies would dent confidence in the housing market, damp property prices and push up rents.
Property industry lobby groups criticised NSW and Queensland, warning that the new “populist foreign taxes” would hit supply and do nothing to make property more affordable for Australians. “Let’s call this for what it is — a cash grab from states prepared to play to the crowd on foreign investment and put at risk Australia’s reputation on the global stage,” said Greg Byers, Property Council of Australia’s chief of policy.
He warned that tighter lending conditions on property investors and foreign buyers were already having an impact, with recent data suggesting housing approvals and commencements had passed the peak. Over recent months the federal government has tightened scrutiny of foreign transactions, market regulators have intervened to force banks to curb lending to investors, and lenders have cut back on lending to foreigners.
