Fairer GST distribution model welcomed

UDIA WA welcomed the release of the highly anticipated Federal Government interim response to the Productivity Commission inquiry into the GST distribution system (horizontal fiscal equalisation) today.  We believe that the new model for distribution proposed by Treasurer Scott Morrison will be a much needed boost to the national economy and ensure the WA economy is well and truly on track for growth.

The Federal Government has accepted all recommendations in the Productivity Commission’s report, except one relating to equalising the standard of the average off all states and territories.  Instead, the government proposes to transition to a new HFE system over eight years from 2019-20. The proposed model has been welcomed by the WA state government and industry groups including UDIA and the Chamber of Commerce and Industry (CCIWA).

The preferred model involves moving to a new benchmark that will ensure the fiscal capacity of all States and Territories is at least the equal of NSW or Victoria (whichever is higher). Mr Morrison says that benchmarking all States and Territories to the economies of the two largest states will remove the effects of extreme circumstances, like the mining boom, from Australia’s GST distribution system.

In addition to moving to a new equalisation standard, the Government also proposes to commit to put in place a ‘floor’ on the relativity any State can receive. The Government will implement a floor of 70 cents per person, per dollar of GST, below which no State’s relativity can fall, from 2022-23, rising to 75 cents from 2024-25.

To assist with the transition to the new system, the Commonwealth has pledged to provide short-term funding over the three years from 2019-20 to 2021-22 to ensure that no State receives less than 70 cents per person per dollar of GST.

On behalf of our members and the broader WA economy, UDIA WA will urge the state government along with the federal opposition, to support the Federal Government’s proposal in the coming weeks.

The Productivity Commission report into Horizontal Fiscal Equalisation can be found here.

The Federal Government interim report/ response can be found here.

UDIA WA media release on the issue is here.

Greenfield market update sets target of 700 lots per month

Director of Research4 and ‘greenfield guru’ Colin Keane gave a comprehensive presentation on the current greenfield property market in Perth at a UDIA Industry Luncheon on Friday attended by over 350 property industry professionals.

Colin set a clear target for the development industry, stating that in order to reach ‘normal market conditions’ we need to be selling an average of 700 lots per month.  He says to reach this target, WA needs to lift population net gain by 1000 persons per month and create 500 new jobs per month.

Colin suggested that while jobs growth is important, it shouldn’t be the only focus in attracting more people to the state, with more focus on ‘brand Perth’ required to attract people to the lifestyle opportunities on offer here.

Perth has a lot to offer and can compete with the likes of Sydney and Melbourne to get people moving here to live and do business. It is critical in the context of the new knowledge economy and the fact that many white collar workers can do their business from anywhere in Australia, that Perth and WA more broadly attracts people to base themselves here.

Looking at the breakdown in market share across Perth, according to Research4 data, the North East Corridor is the largest market, with 28% market share in 2018, followed by the South West Corridor (26%), South East with 22% and North West with 19%.

With a median lot price of $224,000, Research4 has recorded 0% annual growth in Perth land prices over the last 12 months.

Mr Keane suggests that current values in Perth are $6000 under fair market value and the modelled median land price should be sitting at around $231,000.

In terms of future capacity to accommodate growth, the Perth land market is well placed with capacity to satisfy the ‘T700’ target for land sales.

Thank you to our Industry Partners LD Total and Strategen Environmental for supporting the event and APD Engineering for sponsoring the networking drinks following the luncheon.

UDIA National Council meeting

UDIA WA President Nick Allingame and Treasurer Alf Lay represented WA at today’s UDIA National Council meeting in Sydney.  The purpose of the meeting was to discuss key national advocacy items including establishing a plan for the upcoming election and prioritising national research issues.

Representatives from Infrastructure Australia also provided a guest presentation on the federal funding currently available.

Each state also provided an update on their activities, with WA outlining some of the key recent advocacy work undertaken including on the Strata Title Reform; SAPPR review; planning reform; and Perth and Peel at 3.5million sub regional frameworks.

SAPPR Review update

UDIA has been invited to make a submission to the Independent Review on the Strategic Assessment of Perth and Peel Regions (SAPPR) by Friday 27 July.  While the UDIA subcommittee on SAPPR will lead our submission response, we welcome further feedback from members. If you would like to provide comment to inform our submission, please email policy@udiawa.com.au as soon as possible.  UDIA will also meet directly with the members of the review panel in the coming weeks to discuss our position in detail.

Affordable housing action plan released

The state government has released an Affordable Housing Action Plan 2017-18 to 2019-20.  The plan aims to deliver 7,700 homes for people on low to moderate incomes and sets a target to 35,000 affordable housing opportunities by 2020.

The eight key focus areas include reforming the planning and approvals systems and introducing a new medium density development code; increasing housing diversity and adaptability; leveraging METRONET precincts including via the $394 million Housing and Jobs package announced in the state budget; and creating new and renewed communities through urban renewal and major new projects such as Brabham, Yanchep and Treeby.

The Housing Authority is looking to partner with industry, developers and landowners to deliver affordable housing. They are requesting the private sector to present for consideration submissions for the development of well designed, well located and value for money affordable housing in metropolitan Perth or regional Western Australia.

More information and the full plan are available here.

National Housing Infrastructure Facility established

The establishment of a $1 billion National Housing Infrastructure Facility (NHIF) to finance housing-related infrastructure was approved by Parliament last Thursday. The facility was announced in the federal budget.

The NHIF has been welcomed by UDIA National, which has been working with the federal government to get the facility established, in the hope that it will help tackle critical housing affordability issues.

The NHIF will fund loans, grants and equity investments into local infrastructure to unlock housing supply, improving affordability.

The legislation also implements the ‘bond aggregator model’ to help finance affordable housing projects. The model aggregates the equity from housing providers, enabling easier access to finance for affordable housing projects.

More details on the structure of the facility can be found here.

RBA holds cash rate

Another month and another decision to hold the official cash rate at 1.5 per cent by the Reserve Bank of Australia (RBA).

In terms of the property market, the RBA noted that housing prices have little changed across the nation over the last six months. Although, conditions in the Sydney and Melbourne housing markets have eased, with prices declining in both markets.

The Governor Philip Lowe states that “housing credit growth has declined, with investor demand having slowed noticeably. Lending standards are tighter than they were a few years ago, with APRA’s supervisory measures helping to contain the build-up of risk in household balance sheets. Some further tightening of lending standards by banks is possible, although the average mortgage interest rate on outstanding loans has been declining for some time.”

The full statement is available here.

Latest approvals data released

The number of dwellings approved in Australia fell by 1.5 per cent in May 2018 in trend terms, according to data released by the Australian Bureau of Statistics (ABS) earlier this week. In Western Australia, approvals fell 0.8 per cent in trend terms.

Approvals for private sector houses fell 0.5 per cent in May nationally and by 0.6 per cent in WA.

More details here.

Foreign investment in real estate falls

According to the latest report by the Foreign Investment Review Board (FIRB), residential real estate approvals fell substantially from 40,149 approvals in 2015–16 to 13,198 in 2016–17. FIRB says the most significant factor explaining the drop is the introduction of application fees in December 2015, which resulted in investors only applying for properties they intended to purchase (that is, a reduction in the number of applications rather than necessarily a reduction in actual investment).

Other factors that may also have contributed to a reduction in applications include tighter Chinese capital controls, weaker market conditions and additional taxes imposed on foreign investor purchases in some Australian states.

Stronger rules for foreign investors owning Australian housing have now been introduced by the Federal Government in the 2017-18 Budget, including the use of residential dwellings and capping the level of foreign investment in new residential developments. These measures are also likely to have an impact on foreign investment in residential housing.

The full report can be downloaded here.

We welcome your feedback!

UDIA is currently working on several submissions to government on a range of issues relevant to members.  We welcome member’s feedback and comment to inform our submissions.  We are currently seeking comment on the following:

Planning Reform Green Paper – submissions close 20 July 2018. More information available here.

Swan Valley Planning Review – submissions close 30 August 2018. More information available here.

Market-led Proposals Policy – submissions close 9 August 2018. More information available here.

Please send your contributions to policy@udiawa.com.au.

Fly direct to Hobart

Virgin Australia has announced they will commence direct flights between Perth and Hobart three times per week in September 2018.  The state government hopes that the new service will attract more visitors to WA from Tasmania, given that on average 41,000 Tasmanians visit WA each year.

The announcement came at the same time that a Business Travel Pulse report found international flight fares between Perth and locations such as Singapore and London have risen more than five per cent in the March 2018 quarter.

UDIA Frasers Property Women in Leadership Award 2018

Nominations are now open for the 2018 UDIA Frasers Property Women in Leadership award.  If you are considering entering, read the latest blog from our 2017 winner Tamara Heng to find out what she has gained from the experience.

WGV Waterwise Development update

UDIA WA is a supporting partner of the WGV Waterwise Development Exemplar program which is an ‘innovation by demonstration’ project by LandCorp located in White Gum Valley, Fremantle.  The project showcases precinct-scale design excellence by incorporating a range of diverse building types, climate sensitive considerations, creative urban greening and leading-edge water management strategies.

The innovations at WGV are being captured via a series of research programs in cooperation with a variety of research partners including Curtin University, the CRC for Low Carbon Living, CRC for Water Sensitive Cities and ARENA.

The recent annual update on the program provided a summary of the achievements to date including the fact that all of the single residential houses, Gen Y Demonstration House and the SHAC (Sustainable Housing for Artists and Creatives) apartments are sold and/ or fully occupied.

The full report is available here for those interested in the progress achieved to date.

METRONET projects to commence

Construction on the Thornlie-Cockburn Link and Yanchep Rail Extension is scheduled to commence next year, with the project definition plans for the METRONET projects approved by Cabinet. The government will now submit the projects to Infrastructure Australia for consideration in coming weeks.

The Yanchep Rail Extension will deliver the last 14.5km section of the Joondalup Line from Butler to Yanchep. The 17.5km Thornlie-Cockburn Link will connect the Mandurah and Armadale Lines, creating development opportunities around the proposed Nicholson Road and Ranford Road stations and improving access from the southern suburbs to Optus Stadium.

Thornlie Station will become a through station and a new platform will be built at the northern end of Cockburn Central Station.

UDIA WA fantasy Tour de France league

Our resident cycling enthusiast and Director of Policy & Research Chris Green, has set up a UDIA WA fantasy league for the upcoming Tour de France. If you want to do more than just enjoy the scenery while watching on television, and are keen to get involved, visit the Velogames Fantasy Cycling website here and set up your own team, then you can join the UDIA WA league using the code 47713797.  Enter your team by this Saturday 7 July to participate!