New South Wales hikes property tax for foreigners

Properties in areas like Hunters Hill (above), a suburb that boasts views of Sydney Harbour, have been popular with foreign buyers. However, potential home owners might be put off by upcoming tax changes in New South Wales, which plans to raise a sur
Properties in areas like Hunters Hill (above), a suburb that boasts views of Sydney Harbour, have been popular with foreign buyers. However, potential home owners might be put off by upcoming tax changes in New South Wales, which plans to raise a surcharge collected from foreigners on home sales to 8 per cent. PHOTO: REUTERS

SYDNEY • Australia's most populous state will double property taxes for foreign buyers, the New South Wales treasurer said yesterday - a move aimed squarely at Chinese investors and appeasing voters worried about housing affordability.

The push comes amid a raft of regulatory action to cool a hot housing market, especially in the country's east, and as concerns grow that foreign buyers have priced many locals out of the market.

The new charges, effective from next month, come just as the frothy sector is showing cracks, with prices slipping in Sydney and Melbourne last month.

A surcharge collected from foreigners on home sales will rise from 4 per cent to 8 per cent, while a land tax for foreigners is also being raised, New South Wales Treasurer Dominic Perrottet told reporters. Victoria state made a similar move a year ago.

The national government in its budget earlier this month imposed fines for foreign owners with properties vacant for at least six months of the year, plus curbs on the types of property available to foreign buyers.

Meanwhile, home prices fell last month in Sydney and Melbourne, CoreLogic figures published on Tuesday showed, following dramatic gains of over 15 per cent in those cities during the 12 months to April.

Chinese investors are likely to be hit the hardest - they are the largest foreign buyers in the property sector here, accounting for two-thirds of the A$47.3 billion (S$48.6 billion) invested during the 2016 financial year, government data shows.

"I think it will heavily discourage their investment," said Mr Ted He, who is managing director of CLG Corporate, a firm that advises Chinese property investors.

New South Wales Premier Gladys Berejiklian said the measure was part of a broader push to put downward pressure on property prices and make it easier for first-time buyers to make purchases.

The Reserve Bank of Australia in April warned of rising housing debt stoking bubble risks in the sector.

Policymakers - concerned that a blistering run in home prices could create the expectation of a further jump in home values - have blamed speculators, led by foreigners, of pushing prices to unsustainable levels.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 02, 2017, with the headline 'New South Wales hikes property tax for foreigners'. Print Edition | Subscribe