A decision to charge foreign investors buying in NSW the highest fees in the country, in addition to federal budget measures, has been slammed by real estate pundits as a move that “totally defies economic logic” and will make affordability issues worse.

The NSW budget is set to double the stamp duty for foreign buyers to 8 per cent and increase land tax from 0.75 per cent to 2 per cent, which will cost offshore buyers tens of thousands in additional fees.

These additional funds are being redirected to fund housing affordability measures, including reduced stamp duty for first-home buyers.

But the measures could actually see affordability issues made worse, explained Sue Jong, chief operations officer of Chinese real estate portal Juwai.

“This policy could decrease foreign investment in NSW new property by as much as 15 per cent,” Ms Jong said.

But while it’s likely to reduce demand, it could also cause a decrease in supply.

“With every misguided new policy proposal, foreign investment will decrease along with new housing construction, housing affordability and construction employment,” Ms Jong said.

“For every unit a foreign buyer purchases, they enable developers to build four more homes for first-time buyers and investors.”

The top Sydney suburbs by Chinese buyer inquiries to the platform were Castlecrag, Sydney CBD, Riverstone/Marsden Park, Pyrmont, Ryde, Waterloo, Moore Park, Rhodes, Epping, Burwood and Point Piper.

There were concerns foreign investors might consider other states and territories where fees were lower.

In Victoria, there is a 7 per cent stamp duty charge and 1.5 per cent land tax for foreign buyers. In Queensland, there is a 3 per cent surcharge. Perth may also have a future surcharge on foreign investment of 4 per cent.

But Richardson & Wrench Mosman director Robert Simeon said the measures the state budget was set to introduce would not be significant alone.

However combined with the federal budget’s limitation on foreign buyers to 50 per cent of new developments, and a vacancy tax, he warned many projects would be shelved and prices could decline.

“Developers can’t usually get funding without 75 per cent of apartments being sold off the plan,” he said.

“It totally defies economic logic.”

But Premier Gladys Berejiklian said the government did not expect the changes to stamp duty to have a big effect on foreign demand.

“However, if it does, that will make it easier for local buyers to compete,” Ms Berejiklian said.

Some developers agreed the extra tax on foreign buyers would not impact their ability to build and sell new homes.

Chief executive of Chinese developer Shanghai United, Yangdong Xu, said they intend to spend $1 billion in Australia in the next decade, having already spent $600 million in the last two years.

While their focus is on building for local buyers, he said offshore investors found Sydney relatively inexpensive compared to other global cities, and it compared favourably as the income to price ratio in Shanghai was one to 40 or 50, compared to one to eight or 10 in Sydney.

He believed the budget measures were aimed at reducing offshore buyers making short-term investments, to comfort local residents, and to increase stamp duty revenue.

But he did concede the budget changes from the federal government could have some “negative effect” on foreign investment in other parts of Australia.

“For Sydney itself it’s not a big political change, it won’t have a big effect [on] the market.”

While the changes would collectively have an impact, they were also being introduced in a market that is already cooling, BresicWhitney director Shannan Whitney said.

“We’re in a slowdown we have felt since the beginning of the year – where we sit, it’s a gradual introduction of a lot of different impacts and sentiment has definitely changed,” Mr Whitney said.

He said it would undoubtedly have an impact, but it would be hard to see the full effect as the current slowing was a “natural part” of a cyclical post-boom market.

And this slowing could have positive effects, Laing + Simmons managing director Leanne Pilkington said.

“I don’t think it’s a bad thing – we have to find a balance after the boom and this is a great start,” Ms Pilkington said.

“The interest-only loan restrictions, reductions in lending to foreigners, all these different things play together,” she said.

“There will likely be some people who won’t be able to settle, which could provide opportunities for first-home buyers.”

Comparison website RateCity spokeswoman Sally Tindall was also supportive of the decision to charge higher fees, and use the funds for first-home buyer initiatives.

“Channelling this money into stamp duty exemptions and concessions for first-home buyers is a good move, as it is less likely to push up property prices than one-off payments like the first-home owners grant,” Ms Tindall said.

“The stamp duty changes are, however, just one measure and for many, still only a small step in their efforts to save for a deposit.”