Earlier this week, the Queensland government announced new withholding rules that apply to property contracts of $2 million or more, entered into on or after 1 July 2016.
This will see a 10 per cent withholding fee incurred at settlement when the purchase value is $2 million or more from a foreign-resident seller. The withheld amount will be credited against any capital gains or income tax payable by the seller on the sale.
Raine & Horne Surfers Paradise principal Clark Brackenridge said the new withholding rules, coupled with the increased stamp duty and land tax surcharges to foreign investors in New South Wales and Victoria, will encourage foreign buyers to consider the South-East Queensland market, where it’s possible to secure quality real estate priced well below the withholding threshold.
“It is early days for this new ruling and foreign buyers are just starting to absorb the longer-term ramifications of this additional red tape,” Mr Brackenridge said.
“Notwithstanding the new withholding requirements, we are already seeing more foreign money starting to find its way to the Gold Coast, with new stock very popular with overseas buyers.
“At the same time, with a median apartment price in Surfers of $345,000 and yields above 5.0 per cent, this is much better value than you’ll get in Sydney or Melbourne, so it makes sense that with or without the new withholding laws, overseas buyers are starting to take the Gold Coast market seriously.”
Raine & Horne Chermside principal Kim McHardy echoed this sentiment but noted that Brisbane’s affordability rate is also likely to attract more foreign buyers in the coming years.
“Southern-state investors are more dominant than foreign buyers in Chermside, which is less than 10 kilometres north of Brisbane; however, the introduction of the withholding regulations for foreign vendors will help us attract more overseas buyers longer-term,” he said.
“Other features that will tick the boxes for foreign buyers include a growing pool of new apartment stock in Chermside [and] excellent proximity to the CBD and Brisbane Airport.”