New foreign investor tax could drive up house prices
Proposals to curb foreign investment in New South Wales could actually drive up property prices, it has been claimed.
The NSW government has proposed a 1.5% surcharge on land tax for foreign investors. Urban Taskforce chief executive Chris Johnson has said the aim of the surcharge seems to be to match rules imposed on foreign investors in Victoria, “which will remove the point of difference that NSW has”.
“The Sydney region needs 33,200 new homes a year according to the Department of Planning but last financial year only 27,348 were built leaving a shortfall of nearly 6,000 homes. We must do all we can to boost housing supply and foreign investors have been contributing to this particularly through new apartments. To send a message that these investments are not wanted in NSW can only reduce the flow of capital into new housing,” Johnson said.
Johnson said foreign investors helped drive development by underpinning pre-sales, helping local purchasers “buy into a viable project”.
Johnson argued that an additional tax on foreign investment would further slow housing approvals in NSW.
“The argument for the surcharge seems to be to free up more housing for first home buyers by reducing the number of purchasers but this can only lead to less new homes being built. With an undersupply already pushing prices up a further reduction in supply is likely to only increase home prices,” Johnson said.