Buying a house in Sydney? Get ready for expensive stamp duty
Buying a house in Sydney? Get ready for expensive stamp duty
Property Council of Australia calls it a blatant “cash grab”
In efforts to quell a potential property market bubble and plump up government coffers, the Australian state of New South Wales has announced it will be doubling stamp taxes beginning this week.
On 21 June, foreign buyers looking for residential property in Sydney and everywhere else in NSW will need to cough up a 4 percent surcharge atop the current stamp duty. In 2017, overseas buyers will also be slapped with 0.75 percent land-tax surcharge.
NSW Treasurer Gladys Berejiklian instituted the changes amid growing concerns that locals are being priced out of homes in Australia’s largest state. Median house prices in Sydney currently hover at AUD996,000 (USD736,900), according to Domain.
If successfully implemented, the new round of surcharges may net the NSW government more than AUD1 billion (USD739 million) over four years.
More: How Sydney real estate became a victim of its own success
“These new measures will ensure NSW’s property market continues to be an attractive destination for international investors while making sure that we are able to fund vital services into the future,” Berejiklian said.
Data provider CoreLogic noted that Sydney’s median home prices have doubled since 2008, partly on the strength of purchases of Chinese origin, per Bloomberg. According to the Foreign Investment Review Board, Chinese spent AUD24.3 billion (USD17.9 billion) on both commercial and residential property in the year through June 2015, up from AUD12.4 billion (USD9.1 billion) in 2014.
Earlier this year, high-profile institutions such as Australia & New Zealand Banking Group and Commonwealth Bank of Australia unveiled new tightening measures on lendings to foreign buyers.
The measures echo the Reserve Bank of Australia’s comments in April that Chinese spending on Australian houses carried with it an “indirect risk.”
More: Another year, another record for Asian outbound investment
Sydney’s new tax rates mirror recent increases in Melbourne. On 1 July, the state of Victoria will raise the stamp duty for overseas purchasers to 7 percent.
Victoria and NSW’s moves have been facing resistance from the Property Council of Australia.
“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,” Glenn Byres, the council’s chief of policy and housing, told the Sydney Morning Herald.
Read next: Meet the Sydney-based real estate boss who does his own PR
Source: Property Report