| Speaking at an Urban Development Institute of Australia (UDIA WA) event this morning, the Assistant Governor of the Reserve Bank of Australia (RBA) Michele Bullock suggested that, given current sluggish property market conditions in WA, the newly introduced Foreign Buyers Surcharge ‘won’t help’ matters.
Following a question from UDIA WA CEO Tanya Steinbeck regarding the recent introduction of a Foreign Buyers Surcharge in WA, Ms Bullock said that “in periods of very strong growth in property markets it might help a little bit to take the edge off…” Ms Bullock did say that Chinese government restrictions are also having an impact on foreign investment in Australia. In relation to WA in particular, Ms Bullock said “I would only observe that given the WA market was not particularly buoyant to begin with, putting a tax on it wouldn’t seem to help that circumstance.” UDIA WA warned the state government repeatedly prior to introducing the foreign buyers surcharge that it was the wrong time in the market cycle, at a time when the property sector was looking for government policy that supports growth in order to benefit the broader economy. “While UDIA understands that the Treasurer Ben Wyatt was looking for ways to boost the state budget in the short term when he introduced the new tax, it was not a good move for the longer term,” Ms Steinbeck said. “We are yet to see serious signs of a recovery and, given foreign investment in the property market is integral to the success of the market and the wider WA economy, we have strongly urged the government to remove the tax as it directly detracts from new investment in WA property,” Ms Steinbeck said. In relation to general bank lending practices, Ms Bullock said that the RBA would encourage banks to “think about loosening up lending standards.” “Some tightening in lending standards was appropriate,” Ms Bullock said. “…but we are well aware that we don’t want things to tighten up too much …so we are out there telling banks and asking banks to tell their frontline staff ‘don’t be too stingy’”. Ms Steinbeck said that the property industry would certainly support that call. “Given more positive population growth projected moving forward, UDIA is certainly expecting a return to more positive growth in the property market in the next 12 to 18 months,” Ms Steinbeck said. “We hope banks support those wanting to invest in property in WA and particularly take note of first home buyers looking to enter the market,” Ms Steinbeck said. “WA is on the precipice and it will take all stakeholders including government, banks and industry working together to create a supportive environment for growth,” Ms Steinbeck said. Ends. A transcript of the Assistant Governer’s speech is available on the RBA website here and the audio will be available at the same link soon. |