The state of Victoria plans to introduce new measures to cool overseas demand.
The state government of Victoria in Australia plans to raise property taxes for foreign home buyers, from three percent to seven percent by July 2016, reported Reuters.
“It’s only fair that foreign buyers of residential real estate, who enjoy the capital growth as a result of Victoria’s liveability and the amenity of our cities, contribute to the maintenance of government services and infrastructure,” said Victoria’s Treasurer Tim Pallas, in a statement outlining the state’s budget policies on Friday (22 April).
According to the statement, another reason for the property tax hike is to cool overseas demand for homes in the state, as the surcharges imposed on foreign buyers have had little impact since it was introduced last July.
In fact, residential prices in the state capital of Melbourne have risen by 8.3 percent in the past 12 months, based on data released by Victoria’s Real Estate Institute.
Meanwhile, the property tax hike is expected to have a significant impact on Chinese buyers, as China is Australia’s biggest source of foreign property investments, according to an annual report from the Foreign Investment Review Board.
Earlier this month, the Reserve Bank of Australia also warned that home price growth in the state may soften if international demand weakens, especially from China.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
