The NSW Treasurer says a new strategy to increase stamp duty for foreign property investors will help housing affordability, but the Premier says the policy is exclusively to raise revenue.
In last year’s budget, a 4 per cent stamp duty surcharge was introduced for foreigners purchasing properties.
Treasurer Dominic Perrottet said his priority was to ensure Australians had an opportunity to buy property before foreign investors and raising the stamp duty, to an as-yet-undisclosed percentage, would help locals.
“The great Australian dream is to own your own home — while foreign investment brings an important flow of capital into NSW, my priority is to ensure Australians have that opportunity first,” he said.
However, Premier Gladys Berejiklian said in a press conference later that stamp duty surcharge for foreign investors was designed to raise revenue for the Government and not make housing more affordable for first home buyers.
Doubts over what will help people into housing market
Deputy director of the Australia-China Relations Institute at the University of Technology, Professor James Laurenceson, has also questioned whether the move would improve affordability for Australians trying to get into the housing market.
“The housing prices particularly in Sydney are still going up and that gets at this point — even if the proportion of foreign buyers falls it doesn’t mean that house prices are going to fall,” he said.
He said it was simply not true that foreign buyers, particularly those from China, were squeezing Australians out of the market.
“Foreign Chinese buyers only account [for] 3.6 per cent of demand in New South Wales — a lot of that demand is for new apartments, new houses, not existing houses,” he said.
Professor Laurenceson said 96.4 per cent of buyers were local, so it “was a bit rough to say ‘Chinese buyers are squeezing out local buyers'”.
“Something that the Reserve Bank of Australia has long talked about is the fact that the types of properties foreign investors are buying are not the types of properties first home buyers are buying,” he said.
The Berejiklian Government has made improving housing affordability a priority, and has identified increasing housing supply as a key means to achieve it.
Professor Laurenceson said a Senate Inquiry last year found that foreign investors increased housing supply in Australia.
“It’s basic economics, if you expand supply it’s going to restrain housing price growth, it’s certainly not going to put upward pressure on it.
“There’s lots of reasons why housing prices are going up —but laying the blame at the feet of Chinese buyers when they only account for 3.6 per cent of total housing demand is clearly a misleading narrative.”
By Michelle Brown and Ashleigh Raper
Original title: Housing affordability: NSW Government might raise stamp duty for foreign investors