Hong Kong, China buyers pause investments in Australian real estate on concern of post-election increase in capital-gains tax
- Investors from Hong Kong and mainland China are concerned that the Australian Labor Party - the favourite to form government in May - could raise the capital-gains tax on property investments
A recent surge in demand for Australian property from wealthy Hongkongers and mainland Chinese could be dampened by the country’s upcoming elections, industry experts warned.
Data from London-based Real Capital Analytics showed that Hong Kong buyers spent US$1.2 billion on Australian real estate last year, a 9.3 per cent increase from 2017, while those from mainland China raised their investments to US$2.7 billion from US$2.53 billion in the same period.
“The upcoming state and federal elections have created apprehension among both vendors and purchasers,” said Sydney-based Ken Jacobs, managing director of his own property agency and affiliated with luxury Christie's International Real Estate. “The wild card is uncertainty as to what may happen if there is a change of government.”
Luxury property is defined as real estate worth at least A$5 million (US$3.6 million). Jacobs said 2018 sales of his agency were higher by A$10 million than any other year.
The recent numbers were still lower than the US$5.05 billion that the mainland Chinese invested in 2016, and US$1.24 billion invested by Hongkongers in 2015.
These investments included income-producing assets – defined as office, retail, industrial, hotel apartment and senior housing – and development sites.