Australian property developers across the country are suffering as the additional taxes and levies combined with tighter lending restrictions has begun to hurt the already weak apartment market. Australian billionaire and real estate developer Harry Triguboff who is the managing director of Meriton states that foreign investors who once invested heavily in Australia’s real estate market are now looking elsewhere due to the higher restrictions and dues placed on foreign investors.
Triguboff is not the only developer who thinks this way, Jonathan Hallinan, formerly of BPM (a large real estate developer in Melbourne) claims that since the changes in stamp duty came into effect, foreign sales for his group has been basically non-existent.
Chinese nationals have invested heavily into Australia’s real estate market in the past. However for the last 12 months, foreign investor demand into Australia’s apartment market has slowly declined and is expected to continue its decline this year. When the government decided to make changes to stamp duty and laws concerning real estate in the country, the objective was to ensure that real estate prices were controlled to enable Australians to be able to make affordable purchases. The new legislature passed by the Australian government practically tripled the stamp duty percentage on foreign investors as it went up from 4 percent to 12 percent.
However, it looks like the move has backfired at least for now as foreign buyers have are not willing to pay the extra costs to purchase real estate and there has been no significant increase in the number of Australians purchasing apartments. Hallinan believes the government made a mistake as they should have rolled out the red carpet to continue to attract foreign investment into the real estate sector but they decided to roll out red tape which has negatively impacted the market.
In a statement, Tim Gurner, founder of real estate firm Gurner said
There is no question the banks and government are pushing away foreign investors, which in turn will have a huge effect on Australian housing affordability as supply dries up significantly and demand continues to rise. Its the perfect recipe for another big run on house prices
However not everyone shares the same view as these Australian real estate developers. Data supplied by the Australian Bureau of Statistics (ABS) has shown the demand for higher density housing has actually gone up ever so slightly since the new legislation came into play. ABS reported that in the private sectors, especially in Victoria, the amount of new approvals for housing has risen 30.6 percent which is the largest rise since August of 2016.
These numbers simply show that the foreign investment impact on the Australian apartment market is not as heavy as claimed by developers. While there is a considerable impact left by the diminishing foreign interest, it seems that other interested parties are slowly beginning to fill the void.