FinReview:
NSW will double its foreign investors stamp duty surcharge to 8 percent as part of a series of tax changes designed to make housing more affordable for Australian residents.

The annual land tax surcharge on foreign home owners will also increase to 2 percent from the existing 0.75 per cent.

The NSW government is also poised to widen access to its first-home buyers bonus, offering it to buyers of existing stock rather than just new homes. It is expected to announce more details after a cabinet meeting Thursday. NSW hands down its budget on June 20.

NSW premier Gladys Berejiklian made improving housing affordability one of her top priorities when she came to office. She appointed former Reserve Bank governor Glenn Stevens as an advisor on the issue.


The tax hikes are expected to raise $1.9 billion over the next four years, compared to $150 million raised from the 4-percent tax which was announced in last year's budget.

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But there will be questions about the timing of the measure. Although Sydney house prices have doubled in the past five years, the latest data suggests prices may have fallen slightly in May.

Treasurer Scott Morrison has predicted that foreign buyers will fall by over half this year in response to the high state taxes and a crackdown by the Australian Tax Office on buyers who try to avoid Foreign Investment Review Board approval.

NSW surcharge is now above Victoria which charges 7 percent but it is still below comparable international jurisdictions facing a similar flood of foreign buyers. In Canada some provinces charge as much as 15 percent.

The impact of foreign buyers in NSW is hotly contested. Foreign citizens accounted for about 11 percent of home purchases in NSW in the September quarter last year, according to NSW government data.

I don't see how increasing a tax on something for some people acts other than a disincentive for thosepeople.