Tax hikes will not threaten Sydney property market

PETALING JAYA (June 18): While Sydney will see the imposition of a 4% stamp duty surcharge on foreign homebuyers next week, Jalin Realty International does not see this as the biggest challenge to Sydney’s property market.

New South Wales Treasurer Gladys Berejiklian said from next week, foreign buyers will have to pay a 4% stamp duty surcharge, while a 0.75% annual land tax surcharge will be imposed in 2017.

Jalin Realty founder and CEO Ian Chen told TheEdgeProperty.com that foreign property buyers are one of the biggest groups of Sydney property buyers.

Quoting Meriton, one of the biggest Sydney apartment developers, Chan said one out of five of their purchasers are from Asia.

He said Sydney property has performed tremendously well in the last five years, and the new charge will “definitely” lower its competition to other states.

“The additional stamp duty cost will also give investors lower return, in terms of yield and capital. I believe the new tax will affect demand from foreign investors who may look into other states, such as Perth, Adelaide or Darwin,” Chen said.

However, he said the new charge is not the biggest challenge to the local market.

“While the new tax (4% stamp duty surcharge) may have some impact on foreign interest in Australia, the bigger issue will be the tightening of lending by the local bank towards foreigners,” he noted.

Overall he believed, Sydney’s property market will stabilise and consolidate in the near term.

“Currently, Sydney is enjoying a historically low interest rate and local Australian buyers are still active in the market. The auction clearance rate has been holding around 70% and 80%, which is very healthy,” he remarked.

Besides that, the Australian government has also set a 10-year plan, the National Strategy for International Education 2025, to develop Australia as a global leader in education and to double the current 500,000 international students in Australia.

“Sydney is the biggest city in Australia. It has attracted a lot of international interest due to its stability, transparency and education. The education strategy will have a positive impact in the long term on the property sector in Australia,” Chan said.

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