New South Wales and Queensland became the latest Australian states to introduce new taxes on foreign property buyers in an attempt to stabilise housing prices and ensure local buyers are able to purchase homes, the Financial Times reported. There has been growing public concern in both states over the volume of Chinese money flowing into local real-estate markets which has caused prices to rise significantly.
New South Wales is introducing stamp duty charges for foreign buyers of four percent while Queensland will put a three percent stamp duty charge in place. They will join Victoria who increased an existing stamp duty charge for foreign buyers of property to seven percent in April.
“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, explained in a statement.
Chinese investment has flooded international property markets during the past few years with the Hong Kong and Singapore governments both implementing similar taxes to help stop housing prices from escalating too quickly. The Financial Times noted that property prices in Sydney and Melbourne have experienced a four-year jump that has brought housing affordability and bubble concerns to the forefront.
Some property groups have criticised the state governments claiming the new stamp taxes for foreigners could create a backlog of supply and fail to make property more affordable for Australians. The country’s government is now closely scrutinizing foreign transactions and lenders have cut back on lending to foreigners in an attempt to help reduce the amount of foreign property ownership in Australia.
Glenn Byres, Property Council of Australia’s chief of policy, pointed out that these tighter lending conditions on property investors and foreign buyers are already having an impact on the country’s property market. Some believe housing approvals and transfers in Australia are now past the peak.
