At the end of 2017, South Australia announced that it would impose an additional title tax on overseas buyers from January 1, 2018, at a rate of up to 7 percent. The move has affected some of the enthusiasm of overseas buyers, who are already expensive and now have to pay for something else. After the launch of the move, property companies have worried about the imbalance between supply and demand in the property market, leading to fluctuations in the real estate industry.
Interpretation of "additional tax"
After the introduction of the title tax, if an overseas person buys a $600000 property, the stamp duty will cost A $26830, plus A $42000 for the surcharge (7 percent X $600000), and a total of A $68830 will be paid. If the overseas person buys only 50 percent of the property, the total value is A $300000, stamp duty is A $11330, and the surcharge is A $21000 (7 percent X $300000), which amounts to A $32330, which is still a lot more than the original amount. However, if overseas buyers become permanent residents of Australia within 12 months, the fee will be refunded. So for those who are on the verge of permanent residency, this will have little impact on the home purchase plan.
In addition, the title tax is based on the date of the settlement, not the date on which the contract was signed. Suppose an overseas buyer signed a contract on December 20, 2017 for the purchase of residential land, and then executed on January 19, 2018. Then the overseas buyer will need to pay a 7% title surcharge on property prices.
According to statistics, the plan to increase the surcharge will generate 33.6 million Australian dollars in revenue for South Australia over the next four years.
The main purpose of this tax is to protect local people, not to discourage foreign buyers from buying property in South Australia, where foreign investment flows into our housing market against the backdrop of surcharges imposed by other states. This, in turn, could push home prices up, leaving the younger generation unable to pay for high house prices.
At the beginning of the New deal, South Australia`s real estate industry was "restless."
Shortly after the new policy came into effect, property practitioners found a sharp drop in foreign investor interest in South Australian property. Adelaide local property practitioners said at the beginning of this year: after the introduction of the ownership surcharge policy, Stagnant real estate investment could trigger an oversupply of urban apartments, where investors have abandoned earlier deals to avoid unforeseen costs, and it is hard for buyers to be aware of additional costs such as surcharges when signing contracts. When it comes to apartment-property deals, buyers from overseas are deterred from paying a 10% deposit and a 7% surcharge in addition to a surcharge of 7%. Adelaide`s population growth is slow in itself, and the imposition of a surcharge could lead to a severe oversupply of apartments in CBD. "We initially asked for a reconciliation of the Adelaide CBD apartment property, but it was unsuccessful," the official said. Since then, demand from overseas investors has fallen sharply, by more than 85 percent. "
Daniel Gannon, executive director of the South Australian Real Estate Commission (Property Council SA), said: `the information that South Australia has revealed to the outside world is too vague. Despite a warm welcome to the recent investments in Sanjifu Gupta (Sanjeev Gupta) and (Elon Musk), Yilong Musk, South Australia needs to deliver accurate information to foreign investors, but it has released some ambiguous information about the need for South Australia to release accurate information to foreign investors. Let them know whether South Australia property is open or closed. A tax on overseas investors could also pose a risk to Adelaide`s home-opening industry, with construction workers and others directly affected.
Greg Troughton (Greg Troughton), chief executive of (Real Estate Institute of South Australia), the South Australian Real Estate Association, said:`I hear overseas buyers are not interested in cross-state properties, so these investors can help South Australia`s development, `said Greg Troughton, chief executive of the South Australian Real Estate Association. The policy makers may be called heroes, but the development of South Australia is based on investment, and after making this "stupid" decision, Cranes that stand on skylines may be rare (the number of construction projects will be drastically reduced).
South Australian real estate market "unmoved"
In the second quarter of this year, 4223 independent units were sold in Adelaide, up from four hundred and seventy thousand in the first quarter of this year, also hitting an all-time high, up 3.87% from the previous year. Flat and apartment prices rose to four hundred and fifty seven thousand nine hundred and ninety nine, up 9.86 percent from the previous quarter and 2.25 percent from the same period last year. Compared with the depressed property market in Sydney, Melbourne and Brisbane in eastern Australia, the South Australian property market is still dynamic with surtax increases.
(AUTA Group) head James Guo (James Guo) also said: Adelaide`s real estate market for three consecutive quarters of steady growth, average house prices rose momentum is the country`s first jump. Apartment market growth reached 1.2%, independent housing growth also reached 0.6%. This shows that the supply-demand ratio of Adelaide`s real estate market is still in a healthy state of peace: fewer overseas buyers are entering the market, real estate development is increasing year by year, but house prices are still rising steadily. As a result, the story of foreign buyers pushing up house prices is not accurate. The real impetus to the healthy development of home prices in Adelaide is the strong growth in employment, the rigid demand for housing by the younger generation, and the prosperity brought about by new immigrants living in South Australia.
This also shows from the side that, as a result, the imposition of a title surcharge does not have a significant impact on the local property market in South Australia. Is it that it is wrong to say that the property crocodiles are saying something wrong?. The answer is no. The real estate price is the real estate supply and demand relationship. In the context of a slight decline in demand, as long as the housing supply is not excessive, can still stabilize housing prices, gradually driving house prices up. On the contrary, the South Australian housing market has had a greater impact on factors such as the collection of home application fees and tighter credit from overseas people.
Of course, the concerns of the big crocodiles are not unreasonable, the establishment of a surcharge is still to a certain extent hit investors` confidence, the impact of the surcharge is just not reflected in the market. South Australia`s population has been in negative growth, which is extremely unfavorable to economic development. South Australia is also attracting talents through various means, but the introduction of a surcharge has to a certain extent blocked the inflow of capital, which is contradictory.
The real estate industry is again calling for the abolition of the surcharge
Recently, institutions in South Australia have again voiced the view that the surcharge should be lifted. The South Australian Real Estate Association said that while 3/4 of South Australians opposed home purchases by foreigners, the surcharge imposed on overseas buyers should be abolished. "We should attract foreign investment into the real estate market, not stop them," Greg said. The introduction of this policy was wishful thinking and should be abolished immediately. Our business environment is open and should not exclude foreigners. The key to South Australia`s development is to allow more people to spend more time doing more work and to boost the economy by spending more. Of the 28000 homes sold each year, less than 300 are sold to foreigners. "
Social commentator David Charco (David Chalke) says: public opinion is rarely based on facts and is more likely to believe what they want to believe, if people are more willing to believe that the rise in house prices is caused by foreigners buying houses. Then it will become the direction of public opinion and eventually become a "fact". Gas, water, electricity and community costs all increase housing costs, so people become more sensitive to housing costs and are more aware of other factors that affect the rise in house prices.
There is also a view that tax rates can be lowered, consumption stimulated and local industries and supplies boosted if only for fiscal revenue. The imposition of additional taxes will only keep foreign investors out of South Macau, affecting the healthy development of the local industry and, to some extent, a "short-sighted" performance. Only when the entire market becomes more vibrant and well developed can South Australia become more prosperous and longer-term.
Young people can`t afford to buy a house. What`s the problem?
In order to prevent the next generation from being able to afford to buy a house, the most effective way is not to stop foreigners from buying a house, but to start with stamp duty, giving concessions or waivers. Stephen Knight, executive director of (Housing Industry Association SA), the South Australian Housing Industry Association, said the cost of stamp duty in South Australia was too high and was one of only three states that did not offer concessions to buyers. Nor is there any incentive to build or buy homes in the country`s budget, which is disappointing. 85 percent of respondents said stamp duty should be abolished.
Most young people have only A $30,000 to A $40,000 in deposits, most of which are spent on stamp duty, one interviewee said. Children may be able to afford their homes in the future, but for now, they can`t afford them without parental support. In addition, credit tightening and other policies are also added to the hardship.
Recently, Australia`s immigration policy is constantly tilting towards remote areas, eastern cities are restricted, Western Australia and the Northern Territory are too remote, and South Australia has gradually become the most popular capital city for new immigrants. I believe that in the future, South Australia has become the most popular capital city for new immigrants. The negative population growth will gradually reverse, South Australia needs to be prepared in advance, need to lower the threshold for overseas buyers to enter the market, so that they can settle down sooner, more smoothly, let Adelaide usher in a new round of economic growth.
