Populist foreign taxes damage housing supply

Housing supply in our major capital cities is being put at risk by counter-productive taxes on foreign investment, according to the Property Council of Australia.

New South Wales has joined Queensland and Victoria in imposing surcharges on foreign investment.

“We’ve now got a race to the bottom on populist taxes that do nothing to fix housing supply or improve affordability,” said Glenn Byres, the Property Council’s Chief of Policy and Housing.

“Let’s call this for what it is – a cash grab from states prepared to play to the crowd on foreign investment and put at risk Australia’s reputation on the global stage.

“Mike Baird is channelling Bob Carr and the failed vendor duty – introducing a bad tax at a bad time and inflicting damage on the housing construction industry.

“We are already seeing signs that tighter lending conditions are having an effect on the market, and the trend is that approvals and commencements have passed the peak.

“As the Prime Minister says, if you want less of something, you tax it more.

“You also give up any pretence of being a global city if you increase taxes on foreign investment.

“Offshore investors account for about 15 – 20 per cent of pre-sales in our capital cities and help switch projects from concept to construction.

“This helps maintain a supply pipeline crucial to close the demand gap, lifts affordability and every new home constructed supports up to 40 jobs.

“If the states want to boost affordability, they would take responsibility for fixing their dysfunctional planning systems that add to the cost of new homes through red tape.

“They would also remove stamp duty, the biggest barrier to home ownership, which adds up to $60,000 over the life of an average mortgage.”

Media contact:  Glenn Byres | E [email protected]

Populist foreign taxes damage housing supplyHousing supply in our major capital cities is being put at risk by counter-productive taxes on foreign investment, says the Property Council’s chief of Policy and Housing, Glenn Byres.In the past week, NSW has joined Queensland and Victoria in imposing surcharges on foreign investment.”We’ve now got a race to the bottom on populist taxes that do nothing to fix housing supply or improve affordability,” Byres says.”Let’s call this for what it is – a cash grab from states prepared to play to the crowd on foreign investment and put at risk Australia’s reputation on the global stage.”In measures set to be announced on 21 June, foreign buyers of property in NSW will be hit with a 4 per cent stamp duty surcharge, and will pay an extra 0.75 per cent land tax from 2017.”Mike Baird is channelling Bob Carr and the failed vendor duty – introducing a bad tax at a bad time and inflicting damage on the housing construction industry,” Byres adds.Meanwhile, Queensland Treasurer Curtis Pitt has announced a new 3 per cent surcharge on stamp duty for foreign buyers, a move the Property Council’s Queensland executive director Chris Mountford says amounts to a “broken promise and a high risk move for Queensland’s fragile economy.”Pitt has said the tax will raise $15 million in the first year and $25 million annually after that, but Mountford says the policy is likely to intensify the market’s cooling process.”Foreign investors enable new residential projects to get off the ground, creating a huge economic benefit for the state and producing new stock that puts downward pressure on rents and keeps housing affordable for Queensland families,” Mountford explains.In Victoria, the Daniels Government increased its existing stamp duty surcharge from 3 per cent to 7 per cent in the May budget, while lifting a land tax surcharge for absentee owners from 0.5 per cent to 1.5 per cent.Byres says offshore investors account for up to 20 per cent of pre-sales in Australia’s capital cities, and help switch projects from concept to construction.”We are already seeing signs of a slowing market with tighter lending conditions, as well as housing approvals and commencements passing the peak. “As the Prime Minister says: if you want less of something, you tax it more. And you give up any pretence of being a global city if you increase taxes on foreign investment,” Byres concludes.