Aussies Tax For­eign­ers Ex­tra for Buy­ing Homes Hot Jobs Tak­ing Care Of Tur­bines

▶ Lo­cal banks tighten mort­gage rules for out­siders ▶ “The public has reser­va­tions about for­eign in­vest­ment” Wind-tur­bine ser­vice tech­ni­cian is the job cat­e­gory pro­jected to ex­pand more than any other from 2014 to 2024, out­pac­ing health care and tech­nolo

Bloomberg Businessweek (North America) - - Global Economics - �Jen­nifer Old­ham

Home­buy­ers from China have been get­ting a clear mes­sage from Aus­tralian banks: Look else­where. Cit­i­group’s lo­cal bank will no longer ap­prove mort­gage ap­pli­ca­tions in Aus­tralia that rely on for­eign in­come de­nom­i­nated in Chi­nese yuan and four other Asian cur­ren­cies, spokesman Matthew Cole­man said in an e-mailed state­ment on May 10. Citi had been re­ceiv­ing more ap­pli­ca­tions af­ter a de­ci­sion by Com­mon­wealth Bank of Aus­tralia, Na­tional Aus­tralia Bank, and Aus­tralia & New Zealand

Bank­ing Group that re­stricted lend­ing to non­lo­cals. The banks are be­ing pres­sured to help lo­cal

Chi­nese in­vest­ment dou­bled for the sec­ond straight year

home­buy­ers who feel crowded out by ris­ing prices. West­pac Bank­ing in April said it would stop lend­ing to off­shore cus­tomers who aren’t cit­i­zens or res­i­dents. West­pac wants to sup­port Aus­tralians and per­ma­nent res­i­dents “on their jour­ney to own a home or in­vest­ment prop­erty,” the bank said in a state­ment.

For­eign­ers ac­counted for 20.9 per­cent of Aus­tralian home sales in the year through June 2015, up from 7.9 per­cent in the 12 months ended June 2013. The for­eign money has fueled an al­ready fast-climb­ing mar­ket: Home prices have risen 50 per­cent in the big­gest ci­ties since the end of 2008.

With elec­tions in July, Prime Min­is­ter Mal­colm Turn­bull and the op­po­si­tion La­bor Party are pledg­ing to make homes af­ford­able. “The public has reser­va­tions about for­eign in­vest­ment, and politi­cians can see gains from tap­ping into that sen­ti­ment,” says James Lau­rence­son, deputy di­rec­tor and pro­fes­sor of eco­nom­ics at the Aus­tralia-china Relations In­sti­tute of the Univer­sity of Tech­nol­ogy Syd­ney.

Last year the fed­eral gov­ern­ment cracked down on un­law­ful pur­chases, such as buy­ing an ex­ist­ing home. (For­eign­ers can buy only newly built homes.) As a re­sult, the gov­ern­ment forced for­eign­ers to sell 27 prop­er­ties worth more than A$76 mil­lion ($55 mil­lion). In De­cem­ber the gov­ern­ment in­tro­duced fees for for­eign in­vestors: A$5,000 for a prop­erty worth as much as A$1 mil­lion and A$10,000 for every ad­di­tional A$1 mil­lion. The state of Vic­to­ria will dou­ble a prop­erty tax for for­eign­ers in July. Na­tion­wide, the sur­charge on le­gal doc­u­ments pre­pared for a house sale will in­crease to 7 per­cent from 3 per­cent for for­eign­ers; a land sur­charge on ab­sen­tee own­ers will go up to 1.5 per­cent, from 0.5 per­cent.

In New Zealand, home­own­ers are also blam­ing for­eign­ers. The me­dian hous­ing price has jumped 34 per­cent since April 2012, ac­cord­ing to the Real Es­tate In­sti­tute of New Zealand. Phil Twyford, a mem­ber of Par­lia­ment and spokesman on hous­ing for the op­po­si­tion Labour Party, says the mar­ket “is ex­tremely over­heated, and it’s caus­ing a great deal of angst. Spec­u­la­tors are hoover­ing up low-in­come sub­urbs.” He says for­eign­ers are partly to blame for soar­ing home prices in Auck­land.

In Aus­tralia the re­stric­tions are

hav­ing an ef­fect. Antony Wood­ley, an auc­tion­eer at Mar­shal White in Mel­bourne, says he still sees off­shore buy­ers, “but reg­u­la­tory changes have qui­etened down the phe­nom­e­non over the past few months.”

Aus­tralian prop­erty keeps its ap­peal for buy­ers from the crowded and pol­luted ci­ties of China. Ac­coun­tant Han Fan­tong, a per­ma­nent res­i­dent who re­cently paid A$930,000 for a three-bed­room home in Mel­bourne, got help from his par­ents in China. “Houses here are still a lot cheaper, larger, and bet­ter qual­ity than those tiny apart­ments in Bei­jing,” he says. “I would never imag­ine liv­ing in an Amer­i­can-style house with a gar­den in Bei­jing.” �Bruce Ein­horn and Narayanan So­ma­sun­daram

The bot­tom line In Aus­tralia, for­eign­ers—who ac­counted for 20.9 per­cent of the value of home sales in 2015—face more taxes and re­stric­tions.

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