Sydney is imposing new taxes on foreigners buying homes as concerns grow that a flood of mostly Chinese investors is crowding out locals and killing the "Great Australian Dream" of owning property. Ownership rates across the country are among the highest in developed nations, with having your own house long viewed as a key aspect of Australian identity.
But as prices rise to record levels -- Sydney is ranked only second to Hong Kong as major cities with the world's least-affordable housing -- new potential homeowners have been increasingly forced out of the market with foreigners blamed as a key factor.
Last year, leading apartment developer Lend Lease sold out more than Aus$600 million worth of new units in Sydney's Darling Harbour in under five hours, with The Australian Financial Review reporting that one-third of buyers were foreign.
In response, the New South Wales, Victoria and Queensland state governments have introduced or are set to slap new property and land taxes on foreign buyers, sparking an outcry from developers fearful that they will flee to other markets such as New Zealand and Canada.
Analysts say Australia is an appealing market particularly after Hong Kong and Singapore introduced a 15 percent property tax on non-local buyers and as the local dollar weakened against other currencies. The proposed tax in Sydney's New South Wales state to be announced this week would be only four percent, in Queensland it is three percent and in Victoria seven percent. The island continent experienced an average 7.25 percent annual housing growth over the past three decades according to the central bank, attracting Chinese investment into commercial and residential real estate.
Chinese invested Aus$4.2 billion in 2011-12, rising to Aus$24.3 billion in 2014-15 according to Australia's Foreign Investment Review Board, making them the largest overseas buyers. Meanwhile, there are question marks about whether current data adequately captures the full extent of foreign investment in Australian real estate, with some statistics not delineating between commercial and residential property purchases.
