Steve Mann, the CEO of the Urban Development Institute of Australia, talks about why he believes hiking the tax for foreign buyers could worsen the affordability crisis
Introduction – Tax hike on foreign buyers
Ross Greenwood: Welcome back to Money News. We’ve heard from the New South Wales treasurer, Dominic Perrottet, in regards to the overhaul of new rules in regards to first time buyers to try and stimulate that part of the economy. And certainly after seven o’clock in the news, we’ll do a comparison with the various stakes in these games plus also I’ll speak with the New South Wales Premier Gladys Berejiklian a little bit later. But I thought it was worthwhile getting on one body that is concerned about one element of that. This is about increasing the stamp duty and land tax surcharges on foreign buyers.
The Urban Development Institute of Australia which represents many of those big construction companies is worried. Let’s now go to Steve Mann who is the Chief Executive of that organization. Steve, many thanks for your time.
Interview – Steven Mann CEO The Urban Development Insitute
Steve Mann: Good evening, Ross.
Ross Greenwood: Why worried about foreign buyers? Many people say they’re crowding local buyers out of the marketplace.
Steve Mann: Yes. It’s a very interesting section of a divide in focus, I guess, from the government. I think we want to be a competitive international city, don’t we? Do we want to have closed doors or open doors to the world and do we want to drive new capital into our city or not? These are the sort of decisions that put barriers up for that capital that will help us provide affordable housing. It’s just not the end buyer, it’s the developer that is bringing the firms to create these products.
Ross Greenwood: I certainly get that but many of the developers coming into Australia are marketing those products only to foreign buyers. That seems to me to be one of the fundamental problems when you try to get more housing for local buyers but when you’ve got new construction, it’s only being marketed to the foreign buyers.
Steve Mann: I think that would be a fair concern Ross but really that has changed quite dramatically over the last year. There’s a lot more restrictions on capital coming out of places like China and in fact a lot of those foreign companies are marketing their products here in Australia to Australian home buyers.
Ross Greenwood: Do you believe that that foreign product that’s coming in from overseas is being built by say Chinese developers is fairly typical, do you believe that that type of product is attractive to an Australian buyer in particular an Australian home buyer?
Steve Mann: Our city is changing quite dramatically. We’re almost in a perfect storm of great news in terms of low interest rates and a strong New South Wales, and jobs growth and population growth. But at the same time, we’ve got this real stress in our city of a lot of infrastructure that’s not yet delivered of having the second worst housing affordability in the world.
Ross Greenwood: You’re with Steve Mann, The Urban Development Institute of Australia and of course, you have similar situations in Brisbane where we’ve seen today that apartment sales have dropped 70% in the past 12 months.