The Western Australian Labor government’s first state budget proved positive for property investment as there were no direct increases to property costs for state residents.
“There has been no major changes directly [affecting] domestic buyers which is important for the rebounding industry,” said Damian Collins, managing director of Momentum Wealth.
Lobbying from key property industry bodies, such as the Real Estate Institute of Western Australia (REIWA) and Master Builders WA, was taken into consideration by the McGowan government, as they recognise the recovering state of the market. Hence, the government decided to leave land tax, stamp duty exemptions, and first-home owner grants unmodified.
Nevertheless, the property industry wasn’t totally excused from the government’s search for revenue, with a 4% foreign owner duty surcharge introduced on purchases of residential property by foreign individuals and entities from January 1, 2019. The surcharge aims to increase state revenues by $48m by 2020-21.
“While there could be a slight impact from this, foreign investment only represents a small proportion of the WA property market. Instead, the billions of dollars’ worth of key transport infrastructure spending will put the property market in a strong position to continue its steady recovery,” Collins said.
He was encouraged to see such positive estimates for the economy, which supports his view that the residential property market is on its way to recovery.
“We are already seeing increased competition in the market for good property, and confidence in the market is increasing,” Collins added.
The budget estimates also included an increase in Gross State Product (GSP) at 3%. Employment growth is forecasted to surge by 1.5%, and the State Final Demand is projected to continue to contract in 2017-18, but then increase by 1% in the following year.
Transport infrastructure will be revamped
Road and rail infrastructure has been a major focus of the budget, with billions of dollars allocated to increase the networks, including 20 key road projects totalling $2.7bn. The expansion is aimed at removing congestion, improving road safety, and creating jobs.
The budget announcement also included the identification of the first stage of funding for Labor’s highly publicised “Metronet Plan,” with a total of $1.34bn set aside to cover the next four years of the project.
“Property owners will also welcome the investment in infrastructure, in particular public transport infrastructure, as it adds to the amenity of the nearby residential areas and is a strong driver for property price growth as well,” Collins said.
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