Are NSW's New Property Tax Similar to Vancouver?

• 

  whooah1979 on 18/06/2017 - 18:19

  -1

  The stunt that the Vancouver council pulled was never going to work. All they did was to raise revenue using foreign investors as an excuse.

  • 

    mskeggs on 18/06/2017 - 20:07

    +4

    To be fair, raising revenue from a sector of the economy that has plenty of capacity to pay it, and with apparently no negative consequences on the wider community is the definition of a perfect tax.
    I'm strongly in favour of extra tax on foreign real estate investment in Australia in the current circumstances.
    If the NSW government raises billions from these taxes I will be over the moon.

    • 

      whooah1979 on 18/06/2017 - 20:25

      +1

      I'm strongly in favour of extra tax on foreign real estate investment in Australia in the current circumstances.

      you do realise for every dollar a foreign investor pays to the state now is recovered back later from a local buyer when they sell the property.

      just look at what happened years ago with the fhbg. the vendors up their listing price equal to what the federal government gave out. they will do the same come july 1 when stamp duty exemptions take effect.

      the reality is foreign investors are vital to our economy. the government can't stop it. so don't fight it, embrace it and lets make some money.

      • 

        Lando on 18/06/2017 - 21:10

        -2

        Your comments are so insensitive. Let me guess, finance worker?

        Get a real job and realise that people want their kids to be able to afford houses.

      • 

        mskeggs on 18/06/2017 - 21:45

        +1

        you do realise for every dollar a foreign investor pays to the state now is recovered back later from a local buyer when they sell the property.

        Not sure how you figure this at all? If they pay 10% tax, and sell at a 5% profit, how does the local buyer pay? If they make a 5% loss, how is the local buyer paying?
        Do you know what you are talking about?

        just look at what happened years ago with the fhbg

        That was a grant that offered money to first home buyers, it predictably drove up prices in their market. How is a tax on foreign buyers in any way similar?

        the vendors up their listing price equal to what the federal government gave out. they will do the same come july 1 when stamp duty exemptions take effect.

        Did you post in a wrong thread by accident?

        the reality is foreign investors are vital to our economy. the government can't stop it. so don't fight it, embrace it and lets make some money.

        Taxing foreign investment in existing real estate in particular, or any real estate in general does make us money, and by making it a tax it is directly and evenly shared by all citizens. Perfect, I'm sure you will agree.

      • 

        whooah1979 on 18/06/2017 - 21:46

        @noey:

        Your comments are so insensitive.

        i know, telling someone the truth about how the world works can be harsh. sometimes insensitive. but better that than pretend that it is something it isn't.

      • 

        whooah1979 on 18/06/2017 - 21:56

        @mskeggs:

        Not sure how you figure this at all? If they pay 10% tax, and sell at a 5% profit, how does the local buyer pay? If they make a 5% loss, how is the local buyer paying?
        Do you know what you are talking about?

        they won't sell the property at 5% profit. they'll list the property at 12% - 15% to account for expenses and taxes they've paid over the years, and then let the buyer bargain down a few percent. the local buyers have no choice other than buy the property at the bargain price or continue to rent.

      • 

        whooah1979 on 18/06/2017 - 22:03

        @mskeggs:

        That was a grant that offered money to first home buyers, it predictably drove up prices in their market. How is a tax on foreign buyers in any way similar?

        we took full advantage of the fhbg by listing the property for the price that we wanted + fhbg + agent fees + a few extra dollars.

        foreign investors will do the same by including the taxes in their listing price.

      • 

        whooah1979 on 18/06/2017 - 22:08

        @mskeggs:

        Taxing foreign investment in existing real estate in particular, or any real estate in general does make us money, and by making it a tax it is directly and evenly shared by all citizens. Perfect, I'm sure you will agree.

        i agree that some of us are benefiting from this revenue. but it's the local buyers that will pay for it when they buy these properties from foreign investors in 5, 10 or 20 years time.

      • 

        whooah1979 on 18/06/2017 - 22:17

        @noey:

        Get a real job and realise that people want their kids to be able to afford houses.

        many of us worked hard every day. long hours. sometimes six or seven days to be able to buy a property. they'll do the same when their time comes.

      • 

        mskeggs on 18/06/2017 - 22:19

        @whooah1979:

        Thanks for addressing my comments specifically. A lot of people will just pick at bits they disagree with and gloss over the others. And I was combative in suggesting you didn't know what you were talking about, so I apologise for being a dick in that opening.

        You're comment is only true if a majority of the market is foreign buyers who have paid the tax, and prices continue to escalate. If locals make up the market, foreign investors will lose 10% of the purchase price on every transaction. It will act like brokerage does on a share transaction. You pay your $25 or whatever to make the trade and hope the gains will outweigh it.

        Local buyers can buy and sell without the tax, and so will be favoured.
        I agree the tax will weigh somewhat on prices, because foreign buyers will presumably find it will limit their prospects for gain. They will only make money once their property value grows more than inflation plus the tax rate.

        This isn't a bad thing.

      • 

        mskeggs on 18/06/2017 - 22:21

        @whooah1979:

        we took full advantage of the fhbg by listing the property for the price that we wanted + fhbg + agent fees + a few extra dollars.

        I understand and agree.

        foreign investors will do the same by including the taxes in their listing price.

        They cannot, because the bulk of sales are by local owners and foreigners holding already who didn't pay the tax, so they must meet the market or find their properties overpriced.

      • 

        norrisrules on 18/06/2017 - 22:24

        +1

        @whooah1979: Just because i pay 200k more for a property, doesn't mean I can actually sell it for that price when I'm done with it…

      • 

        mskeggs on 18/06/2017 - 22:31

        @whooah1979:

        Maybe, but only if owners who have paid the tax become the majority and set the marginal price.
        Imagine two buyers of new identical $1m townhouses sharing a wall. One is local and untaxed, one pays the 10% (or whatever rate) tax. The local paid $1m, the foreigner paid $1.1m due to the extra tax.
        5 years later, their townhouses are both for sale. They decide to sell them at a group auction to help out my Internet comment from 2017.
        The first property sells for $1.5m. The second property also sells for $1.5m. How was the foreign buyer able to recoup the extra tax they paid?

    • 

      whooah1979 on 18/06/2017 - 20:31

      If the NSW government raises billions from these taxes I will be over the moon.

      that sounds great, but are the government going to reduce taxes for the locals after collecting this extra revenue? history says no.

      • 

        mskeggs on 18/06/2017 - 22:23

        that sounds great, but are the government going to reduce taxes for the locals after collecting this extra revenue? history says no.

        I am ok with the taxes I currently pay.
        If the government raises billions more and improves the funding of health, education, police, etc. without increasing my taxes because they raised money from a once in a century capital flee from China, history says great, take it, build train lines, invest in infrastructure!

    • 

      TheOneWhoGotAway on 18/06/2017 - 22:38

      Hopefully more good to come for FHB because of these taxes. Hopefully better infrastructure in these new/developing suburbs.

  • 

    TheOneWhoGotAway on 18/06/2017 - 22:36

    Normal logic would be that the extra tax would be seen by investors as unsavoury.
    I read bits here in there that overseas investors still see brick and motor as a secure investment that will continue to increase in value.

    I guess if it was something like 30% it'd start to look crap if each year the property price would go up by 10%, 3 years to break even.

    That's why I'm keen to hopefully see this 8% stamp duty do something big, I'm not sure how unattractive/difficult it is already to invest in Sydney which could make that 8% a considerable deterrent to the lot.

• 

  dcep on 18/06/2017 - 21:26

  Toronto also follow suit with the policy and the result shows it's putting a brake on the property market as of now.
  Whether a correction or crash to follow or not, still too early to tell.

  As for OZ, you might want to wait if you can. It could be a few months away or it could be next year.
  Home owners here are highly indebted and leveraged. They already starts feeling the pressure from stagnant income vs rising costs/debt and cutting any spending to curb the squeeze, hence the slowdown in retails.
  You only need a single event to trigger the dominoes effect and then all hell breaks loose.

  The interest rates trick won't work this time even if RBA decides to cut further, the big 4s have to raise % due to majority of their debt are externals/foreign as the Feds/US continues on raising their rates.
  Of course, Government can delay this by opening the flood gates of immigration and let the foreign investment back in again to kill the market further until everything collapse.

  Personally I'm out of patience as i know the government will do anything to avoid the fall of this ponzi scheme. I'll grab a cheap-ass oversupplied 1 bedder apartment unit by year end with a tiny loan and wait for crash to come, then get a huge loan for my dream house once the dust settles.

  Someone will say a crash won't happen here and I'll continue dreaming/waiting, but i believe history is a good guide and the graph will always be the same as a living heartbeat.

  • 

    TheOneWhoGotAway on 18/06/2017 - 22:32

    Which policy are you talking about with Toronto? The 15% was last year nearly a year back and the first article I linked showed prices dipping but since the last few months nearly coming back to what it was previously.

    It feels like it was just an offset rather than a brake (e.g. if prices start to equalise instead of continually climbing).

    Yes I am ok with waiting a few months to see what happens, perhaps another 1% drop next month and so forth.

    The question I have as a young individual waiting to buy is if the home loan rates increase, getting a the same large loan will be unaffordable forcing me to look for a lower priced property.
    The question is whether because of this pressure, all house prices fall in similar value, i.e. at the end of the day property prices fall such that the interest you pay for that property is the same (because the increase of interest rates balance with a decrease in principal loan amount).