All states on the eastern seaboard of mainland Australia are set to become less inviting to foreign investors after the Queensland government announced it will levy additional taxes on buyers from outside the country.
Following the lead of governments in Victoria and New South Wales, who recently announced additional stamp duty charges and higher land tax rates for foreign buyers of residential real estate, Queensland Treasurer Curtis Pitt yesterday announced foreign buyers in his state will face an additional 3% stamp duty surcharge.
Speaking at the Queensland Media Club yesterday, Pitt was reported as saying that the tax hike would ensure foreign investors are providing their fair share of infrastructure funding and that it would have little impact on demand for Queensland real estate among overseas buyers.
"This will ensure foreign purchasers of residential property, who benefit from government services and infrastructure, make a contribution to their delivery – as local buyers do," Mr Pitt told the Queensland Media Club in Brisbane on Thursday,” Pitt said.
"We welcome mutually beneficial foreign investment. We are confident this surcharge – that does not affect Queenslanders – will also not affect the interest foreign investors have in sharing our state's economic strengths,” he said.
But the Real Estate Institute of Queensland (REIQ) has criticised the move and said it could be “disastrous” for the state’s property market.
“The State Government has failed to consult with industry groups on this matter and if they had, we would have told them how fragile the market is at the moment,” REIQ chief executive officer Antonia Mercorella said.
“This is potentially disastrous news for our apartment market where some estimates have foreign buyers at around 15% to 20% across Brisbane in the new apartment market,” she said.
“The Gold Coast apartment market also relies on foreign investment levels and this could be a significantly negative impact on that market.”
The REIQ claims the 3% surcharge would almost double the stamp duty payable on a $600,000 purchase from $20,000 to $38,000 and said there needs to be more clarification around who is considered a foreign buyer.
“That’s not a small amount – it almost doubles the stamp duty,” Mercorella said.
“It’s not necessarily someone living overseas. It could be a foreign national who’s been living here for many years.”
Mercorella and the REIQ aren’t the only ones to criticise tax hikes for foreign buyers.
Gavin Norris, head of Australia for Juwai.com, an online portal that markets real estate to Chinese buyers, has previously said the moves could have wide ranging negatives for the Australian property market and broader economy.
“For domestic investors and first-time buyers, a new tax on foreign buyers could be a challenge,” Norris said.
“When the government discourages one buyer, it loses tens of thousands of dollars in other benefits. Foreign investors 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,” he said.
