Adding insult to the mounting costs is the the 1 per cent Foreign Investment Review Board application fee introduced in July 2016 that has hit the rarefied trophy market of the eastern suburbs, according to Bill Malouf, of LJ Hooker Double Bay.
???In the case of last November's $60.66 million sale of luxury car importer Neville Crichton's Point Piper home through Brad Pillinger and Bart Doff, the FIRB-approved buyer would have had to pay $600,000 just to seek permission to buy it.
But in some parts of Sydney agents say the new charges are no deterrent to foreign buyers, and in fact demand remains so strong the prestige $5 million-plus market is being propped up by buyers from China.
"Chinese buyers believe the Mosman market is very under-valued compared with the eastern suburbs, and they're here in their truckloads as a result," said industry veteran Kingsley Yates, of The Agency.
Take last weekend's sale on Balmoral slopes' Superba Parade through Yates' son Nic. Listed in late May for $9 million-plus, it sold after a Mandarin-speaking buyer rang at 4pm and had exchanged to buy it by 6 pm for about $10 million.
"Our last five prestige sales were all to Chinese buyers. All at $6 million or more. They are very active in that market at the moment," Mr Yates said.
Darren Curtis, of Christie's International, said he has had a run of sales on the Upper North Shore to foreign buyers who have crossed over from the eastern suburbs because they see more value over the bridge.
- Related: Foreign buyer measures see China's spending soars
- Related: Sydneysiders think foreigners shouldn't be able to buy
- Related: Warrawee house record toppled by $12 million sale
"Most recently a buyer who was looking in the east had a budget of $7.5 million to $8 million but couldn't find what he wanted in Bellevue Hill and area, but was blown away with the land and the quality build he bought in Pymble for $7.3 million," Curtis said.
"There are similar charges applying to these buyers in London and Canada. And for families of this financial capacity the extra fees are likely to be absorbed as the cost of buying in the top end."
On a $5 million property, that cost blows out an extra $770,499 for foreign buyers, according to Shane Garrett, senior economist at the Housing Industry Association.
The extra costs include an additional $690,490 stamp duty surcharge, the annual ongoing $70,500 in additional land tax and the $10,000 FIRB application fee.
Richard Simeon, of Simeon Manners, said the extra charges were not deterring buyers but he has had two off-shore clients reduce their budget to compensate for the additional cost of the tax.
"It means they're competing in a broader, more affordable market. So instead of a budget of $6 million they have a budget of $5.5 million," he said Simeon.
Monika Tu, of BlackDiamondz Concierge, said the big issue for foreign buyers remains the transfer of money out of China.
In the wake of a clampdown in China on capital outflows, the issue of moving money into Australia means buyers need longer settlement periods, Ms Tu said. "And that longer settlement often comes with an extra cost written into the contract for the buyer as well."
Jane Lu, head of Juwai.com in Australia, said the new stamp duty changed the timeframe for buyers from China, but wasn't expected to dent demand in the long-term premium market of $3.8 million-plus.
"These high net worth buyers are driven by lifestyle and providing a great educational opportunity for their children. The cost is not a key factor for many of them," Ms Lu said.
McGrath's Michael Coombs recently smashed the Northbridge suburb record when he sold the Salteri family's waterfront home for more than $20 million to a buyer from China.
Mr Coombs said while foreign buyer demand remains strong, he had two deals in the $10 million to $20 million range fall over in recent weeks after the buyers calculated the extra costs of buying in Australia.
"In both cases they're reassessing if they want to buy in Australia or take their money elsewhere," he said.
The story Chinese buyers driving Mosman's prestige housing market first appeared on The Sydney Morning Herald.