Victorian treasurer Tim Pallas announced that the current surcharge applied to overseas property investors purchasing residential property will see a significant increase from 3 per cent to 7 per cent in the upcoming Victorian budget, which Domain says could add $500 million to government revenues over the next four years.
The surcharge will not apply to non-overseas buyers.
“This is about ensuring foreign owners pay their fair share,” Pallas said, according to the ABC.
“It’s only fair really that foreign buyers of residential real estate, who enjoy the capital growth as a result of Victoria’s liveability, the amenity of our cities, contribute to the maintenance of government services and infrastructure“These charges effectively ensure foreign buyers who don’t pay taxes such as payroll tax and GST until they reside in our communities, fairly contribute to the development and maintenance of government service and infrastructure just like Victorian taxpayers do.”
Gavin Norris, Head of Australia for
Juwai.com, China’s largest international real estate portal, said “for domestic property investors, this could be bad news. The industry says Chinese buying off the plan has enabled many projects to get out of the ground and thus created investment opportunities for Australians, not to mention dwellings for first-time buyers. If Chinese buying slows down, there could be a negative impact on development"Mr. Norris pointed to a slowdown in later months of the year.
"The immediate result of this half billion dollar tax will be a rush of foreign buyers to close their deals before it kicks in on, then we expect a slowdown in transactions in the second half of the year.
“We have surveyed more than 30,000 Chinese international property buyers, and 59.5 per cent of those who make enquiries on Australian real estate are motivated by education. Foreign students spend $18 billion on education in Australia, so if Victoria turns back these buyers its universities also stand to lose revenue. When the government discourages one buyer, it loses tens of thousands of dollars in other benefits.
"They 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.
"Some buyers undoubtedly will shift their focus to other states. We have buyers coming to Australia this weekend, who will look at property in Sydney and Melbourne. You would have to assume they would look at Sydney more favourably in this light.
"Victoria now has more confiscatory foreign buyer policies then New South Wales, Queensland, New Zealand, the US, the UK or Canada," Mr Norris said.
RANKING OF STATES & TERRITORIES FOR CHINESE BUYERS
*2015 full-year user data, based on enquiries made by buyers via
2. New South Wales
3. Queensland
4. South Australia
5. Western Australia
6. Australian Capital Territory
7. Tasmania
8. Northern TerritoryAccording to the latest March quarter residential property survey released by the NAB, 10.7% of all new properties sold in Victoria were to overseas investors, down sharply on the 16.4% level seen in the final three months of 2015.For established dwellings, the level was even lower, accounting for just 7.1% of sales during the quarter, down on 8.6% in Q4 2015 and the lowest level seen in the past three years.
