The property lobby has been quick to oppose the SA Government’s announced stamp duty surcharge on foreign buyers. From The ABC:
Real estate agents specialising in overseas investors have warned the South Australian Government the way a new levy on foreign investment in residential property is being applied will damage the state’s reputation as a good place to invest.
…principal of DG Real Estate in Adelaide Simon Hou said South Australia was the only state imposing the levy from the settlement date rather than the date the contract of sale is signed.
Mr Hou said that means investors who bought a house or unit off the plan more than a year ago would have to pay an unexpected levy of 7 per cent if their property is not built before next year.
“It’s actually quite unfair and I think this will damage South Australia’s reputation badly,” he said…
Mr Hou said there were hundreds of people who had signed off-the-plan contracts before the levy was announced who were now being forced to pay the extra charge…
In a statement the [SA Treasurer] Mr Koutsantonis said investors understood there could be levy changes.
“Whenever someone buys an apartment off the plan, or with a very long settlement period, they do so in the knowledge there could be changes to stamp duty before settlement,” he said…
Auctioneer and real estate agent Jonathan Teng said… “property turnover is slowing down and also the price of property might also be impacted in a negative way”…
Mr Hou is also the president of the China Business Network of South Australia, and has urged the State Government to allow a foreign investor surcharge exemption for residential property in Adelaide’s CBD to ease the negative impact on investment in the city.He said the city needed foreign investment in residential units in the city.
“Over the last 15 years the CBD apartments don’t really have much capital growth or the majority of them actually have no growth over last 10 [to] 15 years,” Mr Hou said.
He said without foreign investment he thought “the CBD apartments might have a collapse in price in capital price”.
But Mr Koutsantonis has rejected the call for an exemption for Adelaide’s CBD.
He said the surcharge on foreign investment “is about ensuring South Australians aren’t priced out of their neighbourhoods by international investors”.
By raising its stamp duty surcharge from 4% to 7%, South Australia has brought its rate in line with New South Wales (8%) and Victoria (7%).
It is excellent policy as it will dampen foreign demand (at the margin), improving access for first home buyers, while also providing the State Government with $36.6 million of revenue over the next four years that can be used for the benefit of the resident population.
