by Your Mortgage | 26 Feb 2015
Foreign buyers to be hit by fee hikes
The property industry has reacted to federal government plans to change the rules on foreign investment in Australian real estate. Under the proposals foreign buyers of property up to $1 million would pay an application fee of $5,000 and those buying in the $1-2 million range would pay a $10,000 fee. There would then be an additional $10,000 payable for every million dollars above $2 million. There has been speculation that the fee would be in the region of $1,500.
Industry bodies have been quick to react with the Real Estate Institute of Australia welcoming the government’s resolve to strengthen compliance and enforcement of foreign investment in the property market but concerned that the fees will discourage it. Although Hong Kong and Singapore have higher fees the UK, US and Canada have none and in other countries such as Switzerland they are lower than the proposed levels. REIA CEO Amanda Lynch is pleased however that the proposals support the institute’s proposal for penalties imposed for breaches of regulations to be increased.
Meanwhile the Property Council of Australia has strongly rejected the proposed new fees with CEO Ken Morrison calling them “a new federal stamp duty by stealth.” He warns that the entire residential property market will suffer and that first-home buyers will be among those that suffer: “It would be an extension of one of the worst, most inefficient state taxes and Australians are the ones who would ultimately pay the price,” he said. Morrison believes that the basis for the tax is itself flawed: “It is an outright myth that foreign investment makes houses more expensive for Australians, quite the opposite.”
Source: REIA, Property Council of Australia
Housing prices are not a risk says treasury chief
The new federal treasury chief John Fraser does not believe that high housing costs are a risk to Australia’s economy. He told a Senate estimates committee that although pockets of high prices, such as those in Sydney, are not healthy they are a contained risk and should not be of concern to the economy at large. Fraser highlighted the lack of land supply as a problem and also believes that plans by the Australian Prudential Regulation Authority to curb investment lending would be successful.
Source: Sky News
Australian households increase spending
There has been a slight increase in spending by Australian households according to the latest figures from the Commonwealth Bank. January saw a 0.2 per cent rise in trend terms from the month before. Craig James from the bank’s subsidiary CommSec commented: “With household finances improving following the fall in petrol prices and recent interest rate cut, we can expect many consumers to slowly start opening their wallets and increasing their spending as we progress through 2015.” The largest growth in spending was in the ACT (0.7 per cent) while NSW saw the largest decline (2 per cent).
Source: Commonwealth Bank