STATE BUDGET AIMS TO BOOST WA ECONOMY WITH ONE HAND AND POTENTIALLY THREATENS PROPERTY MARKET RECOVERY WITH THE OTHER
While welcoming the increased investment in infrastructure and housing affordability initiatives in this year’s WA state budget, the Urban Development Institute of Australia (UDIA WA) has voiced disappointment with the short-sighted approach to foreign investment that the government has taken.
FOREIGN BUYERS SURCHARGE
“The government is underestimating the impact that the increase to the Foreign Buyers Surcharge could have on the property market recovery in WA,” UDIA CEO Allison Hailes said.
“On the one hand, the government has highlighted in the budget papers the improved housing market conditions in WA and likelihood of price rises in 2018-19, and on the other hand they are potentially quashing those early signs of recovery with a tax impost on a significant group of potential investors we want to encourage into WA,” Ms Hailes said.
“The fact of the matter is, the WA property market is in a completely different situation to those on the east coast and we don’t have anywhere near the level of foreign investment that those states do,” Ms Hailes said. “Particularly when you look at the viability of some big apartment projects around Perth, this could be devastating.”
STAMP DUTY & LAND TAX UNCHANGED BUT PROPERTY TAX OVERHAUL STILL REQUIRED
Despite the concerns over the surcharge, UDIA is pleased to see that Stamp Duty and Land Tax rates have not been increased.
“We are glad that the government has refrained from using the broader property market as an easy target for revenue raising,” Ms Hailes said. “However, as we outlined in our pre-budget submission, a major review or WA’s property tax regimes is required to ensure a more sustainable and efficient system moving forward.”
“The budget papers show that revenues from total transfer duties are forecast to fall 0.4% in 2018-19 ($6m) following a decline of 4.7% in 2017-18. Overall revenues are expected to be much lower than previous years moving through to 2020-21,” Ms Hailes said.
“These declines reflect the volatility in the nature of transfer duties and a move to a more stable system that is not so reactive to the peaks and troughs of market cycles would be much more efficient and stable,” Ms Hailes said.
“We believe a broad based land tax system such as that introduced in the ACT could be the answer here,” Ms Hailes said. “We need the government to show some real leadership on this issue.”
UDIA has also welcomed the government’s focus on infrastructure investment to boost the broader WA economy.
“The significant funds from this state budget in conjunction with the recent Federal funding for infrastructure including METRONET, major roads upgrades, hospital improvements and the state’s commitment to establishing Infrastructure WA are all fantastic news for the state,” Ms Hailes said.
“WA has been crying out for a more strategic approach to infrastructure funding and planning in order to facilitate future growth,” Ms Hailes said. “The new Infrastructure WA body will hopefully get us heading in the right direction in that regard.”
“$750 million in the forward estimates for METRONET in conjunction with the federal funding announced previously, is a good sign that we are going to see some real progress in the roll out of METRONET ‘on the ground’ in the near future,” Ms Hailes said.
“This type of investment will go a long way to increasing employment opportunities in WA, with the budget predicting an increase of 50,000 jobs in WA in the next couple of years,” Ms Hailes said.
According to UDIA, the other critical issue that requires addressing in WA is housing affordability and the need to assist more people into either home ownership or stable rental accommodation.
“The METRONET Social and Affordable Housing and Jobs Package that aims to deliver an additional 1,390 new transit-aligned homes, including 320 social housing dwellings, 400 affordable purchase opportunities and up to 300 with universal design is welcomed by industry,” Ms Hailes said.
“Particularly the focus on eight high density METRONET oriented developments,” Ms Hailes said.
“The development industry is looking forward to working with the government to see these projects come to fruition,” Ms Hailes said.
“We would like to see the government go further with some direct policies to combat the lack of housing affordability,” Ms Hailes said.
“An allocation to expand Keystart would have been a welcome move to assist more people into home ownership,” Ms Hailes said.
View UDIA WA’s pre budget submission with more details on our postition here.
For more information:
UDIA WA Executive Manager Communications & Marketing
M: 0421 506 819