The Real Estate Institute of Western Australia has called on the State Government to adopt a Five Point Plan to improve the housing market over the next financial year.
In its 2015/16 pre-budget submission, REIWA has cautioned the Treasurer against targeting the property sector with increased taxes, saying the market was fragile and buyers were cautious.
REIWA President David Airey said stability in the housing market was needed to ensure it could ride out the expected downturn over the coming year.
“The falling population growth rate and increasing number of properties on the market means that the year ahead is likely to be weaker for sales and the Government needs to prepare for that.
“Fewer sales means less stamp duty revenue to government coffers, but that’s no reason to increase stamp duty rates on prospective buyers to make up the shortfall,” Mr Airey said.
REIWA’s submission urges the Government not to lift stamp duty rates for buyers or lower the threshold which sees most first home buyers exempt from the tax.
“Additional costs would be a disincentive for buyers and slow the market further; it’s a false economy in regards to raising government revenue,” Mr Airey said.
Mr Airey said state treasurers often saw the property sector as an easy target, but that stamp duty was an outdated tax that needed to be abolished and replaced with a more simple land tax across all owners.
The pre-budget submission also calls on the Barnett Government to readjust the First Home Owners Grant so that it applies equally to those buying established homes and those building new ones.
In Western Australia, the First Home Owners Grant was changed in 2013 from $7,000 for all applicants to $10,000 for a new construction and $3,000 for an established dwelling.
“This imbalance has skewed many first time buyers to new-builds and as a result this demographic is not soaking up as much of the existing stock as has traditionally been the case.
“The original policy intent was to stimulate the construction sector and that objective has been met. The Government now needs to review the policy to bring more first time buyers back to the established market because the current policy is impacting on trade-up activity across the whole market,” Mr Airey said.
Other recommendations in REIWA’s pre-budget submission include stamp duty relief for off-the-plan-developments to nurture increased density, and removing land tax aggregation rules that penalise investors.
The Five Point Plan:
- No increase in stamp duty rates or reduction to the exemption for first home buyers.
- Uniform application of the First Home Owners Grant.
- Stamp duty relief for off-the-plan developments.
- Disaggregate land tax bills for investors with multiple properties.
- Begin reform of stamp duty to abolish it over time, replacing it with a land tax on owners.
The WA State Budget will be announced Thursday 14 May.
Source: News Release, Government of Western Australia, 04 March, 2015