The chief executive of an online property agency says the recent government hikes to foreign investor surcharges and taxes could backfire.
iBuyNew CEO Mark Mendel labelled the measures put in place by the New South Wales, Victoria and Queensland governments as “greedy”, saying they go “too far”.
“Foreigners buying property in Australia should be paying some tax but the measures that have been announced by three state governments are over the top and could prove counter-productive for the domestic economy,” Mr Mendel said.
NSW Treasurer Gladys Berejiklian on Tuesday announced that foreign buyers of residential property will be hit with a 4.0 per cent stamp duty surcharge from next week and be required to pay an additional 0.75 per cent land tax from 2017.
The Victorian government also declared it will increase its existing stamp duty surcharge, from 3.0 per cent to 7.0 per cent, and raise the land tax surcharge for absentee owners from 0.5 per cent to 1.5 per cent.
In Queensland, the state government announced foreign buyers will incur an additional 3.0 per cent surcharge.
Mr Mendel said iBuyNew – which specialises in off-the-plan apartment and townhouse sales – will not see much impact in the Victorian market because off-the-plan sales do not attract much stamp duty.
“But in NSW and Queensland, buyers pay full stamp duty for off-the-plan purchases so it will make it more expensive to buy in those states than in Victoria,” he said.
“With other states likely to follow suit, what will be the impact on foreign buyers?
“The roll-on effect could be an economic disaster for Australia with fewer international students, slower population growth and higher unemployment.”