SYDNEY (Bloomberg) - Foreigners buying homes in Sydney will face a new property tax from July as New South Wales becomes the second state in the country to impose such a duty amid record home prices and soaring demand from China.
Australia's most populous state plans to introduce a 4 percent stamp duty surcharge and 0.75 per cent land tax surcharge on foreign purchasers to raise more than A$1 billion ($738 million) over four years, New South Wales Treasurer Gladys Berejiklian said in an e-mailed statement Tuesday. That is on top of the current stamp duty that applies to all buyers, which is A$40,490 for a property of more than A$1 million plus 4.5 percent of the value that exceeds that amount, according to the New South Wales government website.
Purchases by foreigners, many with a connection to China, have helped Sydney median dwelling values almost double since the end of 2008, according to CoreLogic Inc., triggering community concerns that locals are being priced out of the market. The increase also follows a clampdown on home loans to foreigners by the largest banks as concerns mount about the health of the nation's housing market.
The state of Victoria, which has Melbourne as its capital, will increase the stamp duty surcharge to 7 percent from 3 percent from July 1, the government said in April.
"The Victorian experience has demonstrated that the measures have not had an adverse impact on the property market," Berejiklian said in the statement.
Chinese spending on Australian residential and commercial real estate rose to A$24.3 billion in the 12 months through June 2015, up from A$12.4 billion a year earlier and A$5.9 billion in 2013, according to the Foreign Investment Review Board's annual report. The Reserve Bank of Australia in its semi-annual assessment of the nation's financial system in April warned buying of Australian homes by Chinese posed an "indirect risk."