Greedy state governments have gone too far in their attempt to improve housing affordability by slugging foreign investors with excessive new surcharges and tax increases.
The tax hikes flagged by the NSW, Victorian and Queensland governments could backfire if foreign investors take their business elsewhere.
Foreigners buying property in Australia should be paying some tax but the measures that have been announced by three state governments are over the top and could prove counter-productive for the domestic economy.
NSW Treasurer Gladys Berejiklian has announced foreign buyers of residential property will be slugged with a 4.0 per cent stamp duty surcharge from next week and pay an extra 0.75 per cent land tax from 2017.
Queensland has also announced a 3.0 per cent surcharge while Victoria will increase its existing stamp duty surcharge from 3.0 per cent to 7.0 per cent and a land tax surcharge for absentee owners from 0.5 per cent to 1.5 per cent.
iBuyNew, which specialises in off-the-plan apartment and townhouse sales, would not see much impact in the Victorian market because off-the-plan sales do not attract much stamp duty. But in NSW and Queensland buyers pay full stamp duty for off-the-plan purchases so it will make it more expensive to buy in those states than in Victoria.
With other states likely to follow suit, what will be the impact on foreign buyers? The roll on effect could be an economic disaster for Australia with fewer international students, slower population growth and higher unemployment.
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