Foreign investor tax risks service industriesData from more than 30,000 Chinese buyers finds the average investor is in the Australian market for inner city apartments worth less than $670,000, says Juwai.com’s Gavin Norris.Juwai.com, one of the world’s largest international property websites, is visited by thousands of Chinese buyers each day. More than two million people visit the site each month to view the 2.5 million properties currently listed across 89 countries.Data based on a staggering 30,000 interviews with Chinese buyers finds Australia is the second hottest destination for property enquiries after the United States.But most Chinese buyers aren’t looking for the million-dollar home. In fact, almost two thirds (63.6 per cent) of enquiries in 2015 were for properties valued at $670,000 or less. Melbourne, Sydney and Brisbane were the most popular markets, with inner city locations preferred.”The main appetite among Chinese investors is for apartments so they can get a foothold in the Australian market,” says Norris, Juwai.com’s head of Australia. “The average Chinese investor isn’t extremely affluent – they may own one or two properties in China – but spare funds they have to invest in overseas property isn’t significant.”Norris says Juwai.com’s data supports the Property Council’s argument that foreign investors are supporting housing affordability.”Those chasing the luxury lifestyle of a Sydney waterfront property may be able to absorb any stamp duty increases, but the average Chinese buyer has a much smaller budget and may be more influenced by changes to stamp duty – and these are the people investing in affordable housing,” Norris says.The New South Wales, Victorian and Queensland governments have all imposed surcharges on foreign investment, but Norris says Juwai.com hasn’t recorded any drop-off in enquiry numbers.There is a tipping point, though. “Singapore’s taxation arrangements for foreigners have exceeded 15 per cent, which has killed off the foreign investor market. We haven’t reached that tipping point on the East Coast of Australia yet, but it’s early days.”Norris says 60 per cent of buyers nominate ‘education’ as their motivating factor for investing in Australia. Immigration and lifestyle factors also far outweigh pure investment.”Education, immigration and lifestyle are all long-term drivers for investors, which means buyers are less likely to be influenced by changes to taxation.”Nevertheless, it’s particularly disappointing that such a blunt tool is being used by state governments to raise revenue when it will have such a significant knock-on effect. “The $8.6 billion that foreign students bring into Australia each year in direct student fees, not to mention the money they spend on other services when they are here, is just the start.”We’ve asked our customers why they are looking to invest in Australia, and it’s clearly about more than just real estate. State governments need to look at whether their main agenda is raising revenue, or whether their policies will affect key service industries such as education and tourism,” Norris concludes.
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