New tax figures show foreign investors buying up big each year in SA

They’re snapping up homes across South Australia at an increasing rate each year, according to new figures that reveal how much foreign investors have paid in tax.

Foreign investors are snapping up homes across South Australia in increasing numbers, as new figures show how much revenue has been generated from the tax on overseas buyers so far.

The numbers show a huge sign of confidence in SA from the international community and herald a “golden age” for investment, but some in the property industry argue the Foreign Ownership Surcharge is making housing less affordable.

The seven per cent surcharge – applicable to foreign persons, corporations and trusts that acquire residential land in SA – has generated $64.1m in revenue since it came into effect under the former Labor government at the start of 2018.

Treasury department figures show there were 130 transactions that attracted the tax in the first half of 2018 and 390 in 2018-19.

A total of 420 foreign purchases were recorded in 2019-20, generating a whopping $36.3m in tax revenue after several large investments that year, showing that foreign owners were not deterred by the Covid-19 pandemic.

In yet another increase, there have been 470 instances of overseas buyers snapping up properties so far this financial year.

The government hailed the figures as a show of confidence in SA’s handling of the pandemic. Picture: Emma Brasier.

Treasurer Rob Lucas hailed the stats as a win for SA and contributed the increase, in part, to reduced land tax.

“These figures are consistent with Adelaide’s growing global reputation as one of the most liveable cities in the world and one that is well and truly open for business,” he said.

“Our relative affordability and cost-competitive business environment – with a reduced top land tax rate from 3.7 to 2.4 per cent and with no stamp duty on commercial property transactions, combined with our strong future economic growth prospects – are creating a significant buzz around Adelaide among investors, both internationally and across Australia.”

SA Property Council boss Daniel Gannon said the figures were “no surprise whatsoever”, given the state’s performance throughout the pandemic and attractive local investment conditions.

“Victoria’s recent increases to property taxes coupled with that state’s management of the pandemic means South Australia has set itself up for a golden era of investment attraction,” he said.

Treasurer Rob Lucas said changes to the top land tax helped create a “buzz” around Adelaide among international investors. Picture: NCA NewsWire / Emma Brasier

Urban Development Institute SA chief executive Pat Gerace argued the Foreign Ownership Surcharge was making housing less affordable.

“Like many taxes, they are quick to be introduced but are far harder to remove,” he said.

“Focusing on the supply of more housing is a better way to keep housing more affordable.

“Investors also provide an important source of rental accommodation for many South Australians and this surcharge discourages that.”

Mr Gerace said the government had an opportunity to abolish the tax – a suggestion that was ruled out by Mr Lucas.

Opposition treasury spokesman Stephen Mullighan said the number of foreign investors flocking to SA was “making it even harder for young South Australians to break into the housing market”.

“It’s clear that foreign buyers are snapping up even more houses in SA,” he said.

“The surge in foreign purchases is generating extra stamp duty for the government, so there’s no excuse not to do more for first homebuyers, especially while prices are skyrocketing.”

It was revealed last week that SA had received $214m more than expected in stamp duty revenue for 2020-21.

Mr Lucas ruled out providing further relief to first homebuyers in Tuesday’s state budget, saying it would only intensify problems caused by the already “overheated” housing market.

The $15,000 First Home Owner Grant remains on the table for those looking to make their first purchase.

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