An extra 4 per cent tax on foreign buyers of residential property in Western Australia will slow economic growth and reduce housing affordability at a time when investment should be encouraged, one industry body says.
The debate over curbing foreign investment to slow the so-called affordability crisis continues, but the Property Council WA says a recent survey reveals an overwhelming majority, 93 per cent, of property professionals believe a 4 per cent surcharge would hurt the growth outlook for the property industry.
Council executive director Lino Iacomella said taxing foreign investment would jeopardise Australia’s international reputation of being open for business.
“Taxing foreign investors will do nothing to address WA’s housing affordability issue. If anything, this tax has the potential to make matters worse,” Mr Iacomella said.
“International investors can choose to invest anywhere they like. The harder we make it for them, the less viable Perth becomes.
“WA has the lowest level of foreign investment in residential property in Australia and putting an extra tax on foreign buyers will lead to a loss of confidence from overseas investors looking to invest where governments have stable tax settings.”
Mr Iacomella said developers need foreign investors to secure funding to ensure projects go ahead.
“If the number of foreign investors falls, these projects may never make it to fruition. Less supply of housing will drive prices upwards, making housing even less affordable for West Australians.”
Mr Iacomella’s comments come after Starr Partners chief executive Douglas Driscoll said earlier that the full impact of foreign investment hasn’t been felt yet around the country, but it will be soon.
Mr Driscoll said the possibility of foreign investment wreaking havoc on the Australian economy is real and swift, preventive action is required.
He said Australia needs to address the prevalence of empty homes and their impact on the affordability issue. Mr Driscoll believes foreign investors are acquiring property in desirable locations and leaving these properties empty.
“We know that the current affordability crisis is a matter of simple economics – demand heavily outweighs supply. Foreign investors are only exacerbating the problem by buying properties and leaving them vacant,” he said.