Two powerful property industry lobby groups are backing State Opposition plans to block the introduction of a foreign buyer tax on residential property.

The Urban Development Institute of Australia WA and Property Council of Australia WA have accused the Treasurer of jeopardising the State’s fragile property recovery.

At 2.1 per cent, WA, with 10 per cent of the population, already attracts the lowest level of foreign investment in the country.

UDIA WA chief executive Allison Hailes said the foreign buyers tax would have a detrimental impact on the property market recovery and deter foreign students.

“Why would a government jeopardise the health of an industry that’s so critical to the State for the sake of a few million dollars in taxation revenue,” Ms Hailes said.

Property Council WA executive director Sandra Brewer said WA already attracted the lowest proportion of foreign investment of any State and taxing foreigners sent the wrong message.

The 7 per cent tax on residential property transactions, first flagged at 4 per cent, was to have come into effect in January.

Treasurer Ben Wyatt is facing a $123 million hole in the State’s finances after the Liberals and Nationals banded together to oppose the foreign buyers tax, outlined in May’s State Budget.

“The WA property market is in the very early stages of 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 reconsider the imposition of a tax that directly detracts from investment in WA property,” Ms Hailes said.

“WA’s current lack of a tax surcharge on foreign investment properties provides WA with a competitive advantage over other States in Australia.”