China-Australia relations: tax rebates, entreaties by Australian states fall on deaf ears as Chinese home buyers await a thaw in ties

Western Australia is offering 75 per cent tax rebate of up to A$50,000 on the duty payable on off-the-plan residences valued at up to A$1.5 million until October 23 this year

In Victoria state, rebates of up to A$27,500 are available under a land transfer duty waiver scheme for purchases of homes with a dutiable value of up to A$1 million

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Suburban homes in Perth, the state capital of Western Australia. Photo: Shutterstock

Published: 12:00pm, 9 Jan 2021Updated: 4:23pm, 11 Jan 2021

Chinese homebuyers, the fifth-biggest group of foreign investors in Australian property in 2019 before relations went into a deep freeze, are turning their backs on the tax rebates and other entreaties offered to lure them back, as they stay on the sidelines to await for a thaw in bilateral ties.

The Chinese were the biggest foreign buyers of Australian real estate from 2015 through 2018. Their inquiries for homes in major Australian cities have fallen by half compared with a year earlier, said Juwai IQI Group, a Kuala Lumpur-based real estate group that specialises in serving China’s clientele.

Sentiments were further dampened by the withdrawal of a group of Chinese investors from their A$80 million (US$62.10 million) purchase of a Sydney office tower, after an eight-month wait to clear Australia’s Foreign Investment Review Board (FIRB), which created a “ripple effect” on the market, further “pushing back potential investor interest,” said a developer.

“There is undoubtedly a lot of uncertainty for Chinese investments in Australia, [before] easing of the political tension between the two nations,” said Sydney Ma, director and general manager of developer Top Spring Australia. “The current FIRB policy reflecting the latest China-Australia tension creates a series of disadvantages for such overseas investors.”

Panorama view of Melbourne's city centre. Photo: Shutterstock

The Australian government hasn’t been doing anything to lure Chinese buyers back, real estate executives said, adding that the introduction of application fees and double stamp duty in the states of Victoria and New South Wales – where the two largest Australian cities Melbourne and Sydney are located – have further discouraged Chinese investments.

On the other side, China’s foreign exchange watchdog regulator had stepped up the enforcement of limits in outward currency remittances to stem potential capital flight even before the current coronavirus pandemic had sent business and investment activities into a slump.