SYDNEY • Soon after Australia's New South Wales state announced it was doubling the tax for foreigner home buyers earlier this month, calls started flooding in to real estate agent Shan Lin.
"My phone never stopped - overseas clients, overseas agents, my channels in China... they definitely feel the pressure," Mr Lin said. Chinese property investors are turning their backs on Australia as a series of measures designed to cool one of the world's hottest real estate markets targets foreign buyers, raising the risk of a damaging correction in house prices.
Australia's latest move follows similar measures imposed in other favoured destinations for mainland Chinese, including Vancouver, Singapore and Hong Kong. But there are fears the measures have been introduced into a frothy market already showing signs of stress.
With Australian banks heavily reliant on mortgages, economic growth slowing and the Reserve Bank warning about households under debt, any sharp fall in house prices risks derailing Australia's record 26-year recession-free run.
In just over a year, all major east coast cities have introduced and, in the case of Sydney, expanded foreign duties; the country's biggest banks have stopped lending to overseas buyers; and the federal government has introduced punitive measures for foreigners who leave properties vacant.
New South Wales' new tax arrangements will see duties from home sales to foreigners rising to 8 per cent of the purchase price, taking total taxes on overseas buyers to more than 13 per cent. "The fact is that a lot of developments hinge on foreign investment," said Housing Industry Association's David Bare. "Applying these measures when the market is starting to cool is going to have a much greater effect than it might've 12 months ago."