15 June 2016
The announcement by the NSW Treasurer that a new 4 per cent tax on the purchase of residential real estate by foreign buyers will slow down housing supply and increase the cost of housing, says the Urban Taskforce.
“The surcharge will double the stamp duty on an average house from $40,000 to $80,000 which will act as a disincentive to foreign investors,” says Urban Taskforce CEO, Chris Johnson. “The Treasurer’s expectation that this will raise more than $1 billion in taxes over four years assumes the market remains buoyant but the new tax could slow down housing supply.”
“Included in the Treasurer’s package is a surcharge on land tax of 0.75 per cent for residential real estate owned by foreigners which will also act as a disincentive to invest in NSW.”
“It would seem that the NSW Government is looking to tax the booming housing property market to generate funds for the state coffers but a tax that penalises purchasers of new homes only acts as a brake on investment.”
“With suggestions from the NSW Government that Value Capture may be applied to new housing to fund transport infrastructure along with the current excessive stamp duty all house purchasers must pay, the tax component of a new house or apartment is becoming very high. The NSW Government must understand that the main reason that housing is so unaffordable in Sydney is due to the taxes they add.”
“The Treasurer partly justifies the new taxes on foreign investors on the fact that they are less than those that apply in Victoria. Foreign investors are getting a clear message from both states that they are only welcome if they pay more taxes and this will inevitably slow down supply.”
“Sydney needs 33,200 new homes a year according to the Department of Planning but last financial year only 27,348 homes were built. To help with housing affordability many more homes need to be built and governments must encourage the market rather than add regressive taxes.”
