How countries prevent foreigners from gathering houses and houses

Singapore imposes a tax of up to 20%, while New Zealand prohibits foreigners from buying houses to stabilize the domestic market and secure homes for citizens.

In July 2018, just a few days after official data showed that private house prices peaked for 4 years in the second quarter, the Singapore Government announced an additional 5% tax increase, up to 12% - 15% for citizens and permanent residents when buying a second home here. Foreigners, no matter how many units they own, will have to pay a 20% tax, up from 15% previously.

Singapore officials said they needed to "cool the real estate market and keep prices up in line with the economy". This measure has helped curb the need to buy houses. However, the price of private houses here suddenly increased to a 5-year peak in the second quarter. Although the increase was mainly due to domestic buyers, data analysis showed that foreign demand also skyrocketed.

Channel News Asia quoted real estate brokers as saying that leading the influx of money back was Chinese buyers. In recent years, Chinese buyers have been the dominant player in the high-end residential real estate market in Singapore, surpassing many tycoons from neighboring countries such as Malaysia or Indonesia.

Apartment buildings in Singapore. Photo: Reuters

Some buy houses to make safe assets in the US-China trade war. Meanwhile, others have a new demand, due to political instability in Hong Kong - the traditional real estate market favored by Chinese investors.

In Hong Kong, Chinese buyers have long been blamed for the fact that the city's real estate prices have more than quadrupled since 1997. Hong Kong is currently the world's most expensive real estate market.

Therefore, since 2012, Hong Kong people have to pay 15% tax when buying a second home. Foreigners and businesses pay an additional 15%. To avoid speculation, buyers within 3 years must pay a maximum of 20% tax. However, Hong Kong house prices have recently cooled down, due to protests and Covid-19 caused Chinese buyers to drop significantly.

New Zealand in 2018 triggered a law banning most foreign nationals from buying real estate available here, except Australia and Singapore due to a free trade agreement. The goal is to reduce the rate of increase in house prices and the proportion of homeless people.

Foreign home ownership has been the focus of criticism for many years in New Zealand, as it has faced a shortage of housing supplies, which has doubled the average price in the country's largest city - Auckland. In the century.

Reuters quoted official figures in 2019 that the percentage of foreigners buying houses in New Zealand is quite low, only about 3% of transactions. However, this data does not include properties purchased through funds. The majority of foreign buyers here come from China and Australia.

However, the pace of house price increases has also decreased significantly since 2017, thanks in part to central bank lending policies. The New Zealand government has also relaxed another ban, allowing foreigners to own up to 60% of the apartments in the new apartment project. They just are not allowed to buy second-hand houses.

Houses in the outskirts of Sydney (Australia). Photo: Reuters
Houses in the outskirts of Sydney (Australia). Photo: Reuters

Australia has long been a favored destination for foreign buyers, especially China. However, demand in recent years has been constrained by the country's tax increase with foreign buyers.

In June 2016, the state of New South Wales imposed a 4% tax on foreign buyers. A month later, Victoria also raised the tax from 3% to 7%. When these policies did not work, New South Wales had to double the tax rate to 8% in 2017. The land tax with foreign buyers here was also raised from 0.75% to 2%.

Foreign buyers, especially Chinese ones, have always been criticized for creating a real estate craze, which has doubled Sydney's home prices since 2009. In May 2017, the state. an additional “abandoned housing tax” of 5,000 Australian dollars per year, for those who have not rented or vacated their homes for 6 months or more.

In 2016, foreign buyers also pushed prices in Vancouver so high that this Canadian city imposed a 15% tax on foreign buyers. However, this does not discourage buyers. Vancouver has raised taxes to 20% and imposed many other taxes in 2018.

Another Canadian city, Toronto, also saw a wave of foreigners buying houses here. In 2017, the Ontario government (with Toronto as its capital) had a 15% tax on other people. As of mid-2018, this policy was somewhat effective, as the number of transactions with foreigners decreased.

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