The Victorian government recently announced that foreign buyers of residential real estate will face higher stamp duty and land tax rates and it is believed the NSW government will announce a similar land tax hike in its upcoming budget.
Gavin Norris, head of Australia for Juwai.com, an online portal that markets real estate to Chinese buyers said the move would make NSW’s property tax arrangements some of the world’s most unfriendly towards foreign buyers.
“Some buyers undoubtedly could shift their focus to other states, or countries,” Norris said.
"With this new tax, New South Wales would have more confiscatory foreign buyer policies than Queensland, New Zealand, the US, the UK or Canada,” he said.
While the reasoning behind hitting foreign buyers with higher taxes is so they provide their “fair share of government revenue”, to use the words of Victorian Treasurer Tim Pallas, Norris said the decisions may prove to be a backwards step economically.
“For domestic investors and first-time buyers, a new tax on foreign buyers could be a challenge. New South Wales right now is building a record number of apartments, and that construction depends to a material degree on foreign off-the-plan sales,” he said.
“If Chinese buying slows down, it will likely make things harder for first time buyers, for construction workers, and for the education, tourism and retail sectors.
“When the government discourages one buyer, it loses tens of thousands of dollars in other benefits. Foreign investors bring construction jobs, government revenue, retail and services spending, education spending, tourism spending and often ultimately become skilled citizens of Australia who help grow our economy and pay Australian taxes.”
In particular, Norris said the decision could have dire impacts on the state’s education industry.
“We have surveyed more than 30,000 Chinese international property buyers, and 59.5 percent of those who make enquiries on Australian real estate are motivated by education. Foreign students spend $18 billion on education in Australia.
“So if New South Wales makes investment conditions less favourable for foreign buyers, its education sector stands to lose revenue.”
