Property locusts swarm WA Government

Last month, property lobbies met with the Western Australian Government to demand a housing stimulus package:

Major property industry players met senior McGowan Government ministers yesterday to plead their case for a sweeping stimulus package aimed at breathing life into the WA’s stagnant housing market.

Removing stamp duty on the purchase of apartments, raising the stamp duty threshold to $550,000 for first-homebuyers and bringing in concessions for downsizing seniors headline the proposal… Other measures… included slashing the foreign buyers surcharge from 7 to 4 per cent and reinstating Perth’s regional migration status in a bid to supercharge population growth.

Backed by the Housing Industry Association, Master Builders Association, Property Council of Australia, Real Estate Institute of WA and Urban Development Institute of Australia, the package also includes boosting the maximum price of homes purchased through Government-lender Keystart from $480,000 to $550,000.

A week later, the Western Australian Government announced stamp duty rebates of up to $50,000 for buyers of new apartments:

Apartment and unit buyers will get a rebate worth up to $50,000 on eligible properties under a two-year scheme announced by the State Government today…

The rebate, revealed by Premier Mark McGowan this morning, will be available for two years to any purchaser who signs a pre-construction contract to purchase a new residential unit or apartment in a multi-tiered development.

There will be no cap on the purchase price and multiple rebates will be available to the same applicant.

Premier Mark McGowan said the initiative would drive investment into the residential construction industry and support the property sector…

“It’s limited to two years and then we’ll see how it’s tracking. It’s designed to get development happening in WA right now.”

However, the property lobby isn’t happy, attacking the State Government for distorting the market and putting jobs at risk:

The property industry has warned the state government’s plan to kickstart WA’s construction sector by paying stamp duty rebates to investors buying off-the-plan apartments might “compromise jobs”.

In a letter to Treasurer Ben Wyatt obtained by WAtoday, the heads of five property industry lobby groups told the government there could be “unintended consequences” of the policy announced last month, including a risk construction on big developments could be significantly delayed.

And this garnered a strong rebuke from Treasurer Ben Wyatt:

…in an interview with Gareth Parker on 6PR this morning, the treasurer said the property industry expected the government to “to react to every demand that comes across their desk”.

“But I have to say, it’s a never ending supply of demands from these guys,” Mr Wyatt said.

“The focus of the government is ensuring people employed in construction continue to have a flow of work.”

He said it was the industry who had asked for the rebate scheme, which was aimed at bringing forward construction until population growth returned to normal levels.

“Overall the activity will be positive,” Mr Wyatt said.

He said the scheme was not designed to “fix the problem the property sector created itself by bringing on too much supply when there’s not enough demand”.

“I didn’t create that problem, Gareth, the property sector did that,” he said.

“We can’t continue to continue just to simply react to the whims and thought bubbles of the property sector.”

This policy will likely make WA’s oversupply issue worse, given it would generate more investment into new builds at a time when demand (population growth) remains anaemic:

 

Indeed, it will bake in further price deflation and for this reason, the WA Government should be commended.

Leith van Onselen

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