Real estate agents and industry bodies are speaking out against moves by New South Wales, Queensland and Victoria to impose higher taxes on foreign property investors.

Michael Pallier, principal of Sydney's Sotheby's International Realty, says he believes the decision to add state taxes on top of federal charges is opportunistic and unfair.

"A lot of people from overseas are talking about it," he said. "They're not impressed, and they're wondering what's next."

He said many sectors of the Australian economy are performing poorly, and property has been a major driver of economic growth in recent years. "Property is a major part of the economy," he said. "If we take away housing, what's left?" 

Pallier pointed out that foreigners do not pay higher taxes in New Zealand. "New Zealand doesn't impose taxes on foreign people," he said, noting "the New Zealand economy is flying."

The Property Council of Australia has also been critical of the new taxes, saying housing supply is being put at risk.

"We've now got a race to the bottom on populist taxes that do nothing to fix housing supply or improve affordability," said Glenn Byres, the Property Council's chief of policy and housing.

"Let's call this for what it is: a cash grab from states prepared to play to the crowd on foreign investment and put at risk Australia’s reputation on the global stage,” he said.

 “We are already seeing signs that tighter lending conditions are having an effect on the market, and the trend is that approvals and commencements have passed the peak,” he said.

“You give up any pretence of being a global city if you increase taxes on foreign investment,” Byres said.

"Offshore investors account for about 15-20% of pre-sales in our capital cities and help switch projects from concept to construction. This helps maintain a supply pipeline crucial to close the demand gap, lifts affordability, and every new home constructed supports up to 40 jobs,” he said.

"If the states want to boost affordability,” he continued, “they would take responsibility for fixing their dysfunctional planning systems that add to the cost of new homes through red tape.” 

New South Wales is the latest state government to announce higher charges for foreign property investors, slugging foreigners with a 4% stamp duty, and 1.75% annual land tax.

Summary of state charges on foreign property investors

For more information, here is the NSW Government's Treasury Budget announcement and NSW Land Tax website, as well as links to the QLD Government's Land Tax website and the VIC Government's Land Tax website.

See also:

NSW joins Vic, Qld with foreign investor tax increase

Queensland increases surcharge on foreign buyers

Victorian government increases stamp duty for foreigners