BIS Shrapnel claims the moves of the Australian government to introduce new application fees for foreign buyers and other efforts to curb overseas investments are similar to “throwing pennies in the path of a steamroller”. The firm said Australian real estate will continue to boom regardless of the government’s measures to control it.
“In the medium term the upwards trajectory of investment will continue as China’s affluent middle class continues to grow and Australia continues to be seen as a safe haven for investment,” BIS researcher Maree Kilroy was quoted as saying by Soureable.net.
“The trends supporting foreign demand therefore remain solid looking ahead, and we expect that foreign investment in housing will continue to increase.”
Starting 1 December, all non-residents who purchase residential property will be subject to an application fee of $5,000 for properties with a tag price of up to $1m and an extra $10,000 for each $1m thereafter. Developers will also need to pay $25,000 for off-the-plan scheme approvals.
Victoria also is imposing 3% land duty surcharge for foreigners and an additional 0.5% land tax from 2016 onwards.
Moreover, foreigners who will purchase Australian properties illegally will be facing prison sentences of up to three years or fines of $127,500 for individuals and $637,500 for companies. Meanwhile, third parties who knowingly assist in the purchase of illegally attained properties face penalties of up to $42,500 and $212,500 for individuals and companies, respectively.
“Consider this: the depreciation of the $A over the past 12 months more than compensates potential foreign investors for the new government fees, by making Australian properties cheaper in foreign currency terms,” said Kilroy.
“The $A has dropped 20% to 25% against the Chinese renminbi. So if you’re buying a $500,000 dwelling you are already $100,000 plus better off anyway.”
Collections: Mortgage News