An avalanche of government changes imposed on foreign property investors risks “killing the golden goose,” warned Victorian property developer Tim Gurner.
The federal government, as well as the governments of New South Wales and Queensland, have all announced increased tax hikes for foreign property owners in their latest budgets. The hikes, which took effect on July 1, have led to a 40% drop in inquiries from Chinese buyers for Australian property.
Brisbane’s apartment market recorded a dive in overseas sales, from 20% in the December quarter to just 4% in the January quarter.
Gurner, who has developed 5,500 apartments in Melbourne and Brisbane, said that international buyers were “not wedded” to Australia, and could take their money elsewhere if taxes and restrictions became unreasonable.
“The reason why the Chinese come here is for consistency, [as well as] a regulatory and political system that is meant to be orderly and easy to understand,” Gurner 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.”
Other factors are keeping the Chinese away, including funding restrictions on foreign lending by Aussie banks, as well as Beijing’s exit clamps on yuan leaving China.
Juwai.com, a Chinese-language international property website, recorded a 40% drop in inquiries for the January quarter, compared with the same period last year. Dave Platter, global PR manager for Juwai.com, said some Chinese agents who used to focus exclusively on Aussie property have started to diversify their offerings to other international destinations.
“If [Chinese buyers] get the impression they are just not wanted here and their investment is at risk, they just won’t come,” he said.
Nevertheless, Platter said search numbers continue to be strong, and is just 1% lower than they were 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.
Urbis, a Melbourne-based property consultancy, found that international sales of off-the-plan apartments in Brisbane had dropped – from 20% from September to December 2016, to just 4% from January to March 2017.
Paul Riga, associate director of Urbis, said the biggest impediment to international sales was the availability of finance, but acknowledged that regulatory changes were also 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.
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