‘Think twice’: Foreign buyers set for double digit fall after tax hike

International sales of local property are expected to fall by a double-digit percentage after a decision to hike foreign buyer taxes – with some fearing it’s the ‘final nail in the coffin’.

International sales of local property are expected to take as much as a double-digit percentage hit after a decision to hike foreign buyer taxes – but experts are concerned about the fallout on the ground.

Juwai IQI co-founder Daniel Ho – whose Asian real estate portal handled over 42,000 property sales last year – said “from the track record in other states, it could mean a 5 to 10 per cent decline in foreign investment”.

This as the Miles Labor government increased the foreign investor land tax surcharge to 3 per cent – one percentage point below New South Wales and Victoria – and raised the transfer duty surcharge for offshore buyers to 8 per cent – equal to the two southern states.

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Offshore buyers mainly buy off the plan, helping add to housing stock.

Mr Ho said “from FIRB data, we estimate that foreign buyers purchase fewer than 1,000 Queensland dwellings per year.  If the new policy cuts foreign buyer transactions by about 10 per cent, that would reduce transaction numbers by about 80 to 100 purchases per year.”

“Since most offshore foreign buyers rent out their properties and also create new supply, this change could push up competition among renters and slow the construction of new projects”.

“Before the new fees, rents already climbed more than 8pc in Brisbane over the past 12 months.”

Mr Ho said offshore buyers often bought off the plan, giving developers the sales they needed to start construction of new projects.

“Without them, many fewer new homes would be built. So, it is very much in the state government’s interest to keep foreign buyers in the market.”

Juwai IQI Co-Founder and Group Managing Director Daniel Ho.

“They know that foreign buyers aren’t behind high prices and that foreign buyers fund new home construction. They are trying to thread the needle between raising revenue from foreign buyers without discouraging demand too much.”

Property Council of Australia Queensland executive director Jess Caire said it would be the final nail in the coffin for apartment stocks.

“Queensland needs more homes built faster and the state government’s decision to hit the companies we need to build those homes is beyond comprehension,” she said.

“Taxing these companies more will simply result in them investing elsewhere, taking their money and housing stock with them; if you think it is hard to find a home in Queensland, this decision just made it a whole lot harder.”

Ms Caire said it was the 10th new or increased tax on property introduced by the Queensland government since 2016.

There foreign buyer taxes do not apply to those who have taken up permanent residency in Australia. Picture: David Swift

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Earlier, state treasurer Cameron Dick justified the decision to increase offshore buyer taxes to fund first homeowner concessions by saying “foreign investors have had a great run in Queensland, but they compete with Queensland families for real estate, so it’s only fair that they contribute to helping more young Queenslanders into their first home”.

Mr Ho said “Queensland has been foreign buyers’ third most-popular state for several years” which could be expected to continue.

“The new costs will certainly make any offshore foreign buyer think twice about their purchase, but the state is still very attractive,” he said.

“There are plenty of people in the world who love Queensland – and a lot of them happen to live overseas. We expect inbound investment and migration to continue not just this year and next year, but for decades.”

He said only foreigners without permanent residency or citizenship would have to pay the increased fees and taxes.

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