Developers are concerned that the state’s new tax and lending policies could severely undermine the appeal of Melbourne’s property market to foreign purchasers.
Roughly 60 representatives of the biggest players in Melbourne's residential property sector recently convened at a conference room in the Westin Hotel on Collins Street to express their concerns about new policies that are expected to deter or impede real estate investment by foreign purchasers.
Leading listed and private developers figured prominently amongst the participants, including Lend Lease and Mirvac, as well as BPM, Central Equity, ISPT and Metro Property Development.
Overseas developers hailing from the Asia-Pacific were also strongly represented, including Chinese state-owned developer Poly Real Estate, Singapore-controlled CEL Australia, as well as Malaysia's SP Setia and UEM Sunrise.
Chief amongst their concerns are the new set of taxes that Victoria plans to levy upon foreign purchasers starting from July 1, including a hefty stamp duty surcharge of seven per cent. The recent introduction of restrictions on lending to overseas investors by the major banks is also a key source of concern.
According to members of the development community, banks have already imposed an abrupt halt upon lending to foreign purchasers, while the introduction of additional levies that specifically target overseas investors could have the effect of severely undermining Melbourne's appeal as an international capital destination.
The upshot of these measures is likely to be a sharp rise in settlement defaults and a widespread plunge in Melbourne's apartment prices, they say.
CEO of the Urban Development Institute of Australia Danni Addison said to the Australian Financial Review that the industry is unified in its opposition to the changes, and that the UDIA and the Property Council will convey its concerns to state government.
"The industry has come together as one voice to tell the government about the real economic impact their decisions are having on the ground," said Addison.