Frequent government changes imposed on foreign property investors risk “killing the golden goose”, says Victorian developer Tim Gurner, as Chinese sales and inquiries for Australian dwellings tumble.
The NSW, Queensland and federal governments all announced increased tax hikes for foreign property owners in their latest budgets, contributing to a 40 per cent drop in Chinese inquiries for Australian property from last year’s record highs. The increases took effect from July 1.
In Brisbane, apartments recorded a dive in overseas sales from 20 per cent in the last quarter of 2016 to 4 per cent in the first three months of 2017.
Mr Gurner, who has developed 5500 apartments in Melbourne and Brisbane, said international buyers were “not wedded” to Australia and would choose to take their money elsewhere.
“The reason why the Chinese come here is for consistency, a regulatory and political system that is meant to be orderly and easy to understand,” he told The Australian.
“The constant changes are a major issue. We have this golden goose and if we want to keep it and let our economies thrive from it then we can, or we can kill it by increasing taxes every day and changing regulation.”
Funding restrictions precluding foreign lending from the Australian banks, as well as tightened controls on exporting money from China, have slowed investment in the market.
May’s federal budget unveiled a new foreign resident capital gains withholding payment of 12.5 per cent for properties worth more than $750,000, unless they receive a special exemption.
NSW lifted its foreign investor stamp duty surcharge from 4 per cent to 8 per cent and Queensland revealed a 1.5 per cent new surcharge on nonresident land taxpayers.
The Victorian government last year increased stamp duty for nonresidents to 7 per cent.
Leading Chinese international property website Juwai recorded a 40 per cent drop in inquiries for the first quarter of 2017, compared with the same period last year.
Spokesman Dave Platter said some Chinese agents who formerly focused exclusively on Australian property had started to diversify their offerings to other international destinations.
“If they (Chinese buyers) get the impression they are just not wanted here and their investment is at risk, they just won’t come,” he said.
Despite the recent change, he said the search numbers continued to be strong — just 1 per cent lower than in 2015. “If this trend continues, Chinese property investment in Australia in 2017 will be lower than last year but will still make this one of the two or three biggest years yet on record,” he said.
Property consultancy Urbis found international sales of off-the-plan apartments in the difficult Brisbane market had dropped from 20 per cent from September to December 2016, to just 4 per cent from January to March.
Urbis associate director Paul Riga said the biggest impediment to international sales was the availability of finance, but that the regulatory changes were having an impact.
“Australia is seen as a safe haven, but there is a threshold and the more red tape and regulation, cost and expenses, they will have an impact on a portion of those buyers,” he said.
A CBRE report released this early month found the Sydney central business district market recorded no slowdown in foreign buyers, despite the changes.
At the Queensland budget, Treasurer Curtis Pitt said the state’s new surcharge was a way to ensure nonresidents were “paying their way” for infrastructure and services as locals contributed.
“The surcharge will ensure absentee owners of land make a fair contribution and will have no direct impact on Queensland residents,” the budget paper said.
Originally Published: http://www.theaustralian.com.au/