Buying a house in Victoria is about to get more expensive for overseas investors

MPhoto by Mark Dadswell/Getty Images

It’s about to become more expensive for overseas buyers to purchase a residential property in Victoria.

Victorian treasurer Tim Pallas announced today that the surcharge applied to overseas property investors — currently 3% — will be increased to 7% in the upcoming Victorian budget, potentially adding $374 million to government revenues over the next four years.

The surcharge will not apply to non-overseas buyers.

“This is about ensuring foreign owners pay their fair share,” Pallas said according to the ABC.

“It’s only fair really that foreign buyers of residential real estate, who enjoy the capital growth as a result of Victoria’s liveability, the amenity of our cities, contribute to the maintenance of government services and infrastructure

“These charges effectively ensure foreign buyers who don’t pay taxes such as payroll tax and GST until they reside in our communities, fairly contribute to the development and maintenance of government service and infrastructure just like Victorian taxpayers do.”

According to the latest March quarter residential property survey released by the NAB, 10.7% of all new properties sold in Victoria were to overseas investors, down sharply on the 16.4% level seen in the final three months of 2015.

For established dwellings, the level was even lower, accounting for just 7.1% of sales during the quarter, down on 8.6% in Q4 2015 and the lowest level seen in the past three years.