The phrase “rental crisis” has been bandied about in recent times with Perth’s vacancy rate at 40-year lows at about 0.8 percent. Rents are rapidly rising as a result of short housing supply now at $395 per week, up 12 percent in a year. REIWA predicts a further 15 to 20 percent increases after the end of the ridiculous moratorium at the end of March.
There have been calls from industry and tenancy advocates for the government to intervene but not much can be done until more housing stock and private investors begin to supply the market.
Encouraging investors to return to the Perth market should be a priority of the state government given the lack of investor activity over the past five years. Without property investors, the taxpayer will need to supply the housing at unsustainable expense.
On the lazy pretext of “everyone else is doing it”, the McGowan government introduced a big new tax on foreign buyers of property after winning the last election. Foreign buyers pay an extra 7 percent transfer duty on top of the original stamp duty normally payable.
At Perth’s median home price of about $485,000, foreign buyers face a whopping tax bill of $52,902. Perth’s median home price would have to grow by 11 per cent in the next twelve months to cover that cost (assuming the tax isn’t borrowed). An investor is unlikely to take such a risk. At Fremantle’s median price, a non-resident would pay an eye-watering $89,900 in stamp duty; that’s offensive.
Foreign buyer taxes are justifiable when non-resident purchaser activity is squeezing out local buyers who are looking to buy a home such as recently experienced in the booming east coast markets. It is well known that Perth’s property market had been stagnant for at least a decade with no net growth in property values for ten years. That is rapidly changing with sales levels now escalating and prices rising yet investors remain cautious and are yet to return in significant numbers.
Foreign buyers looking to invest in Australian property are important because they often soak up sufficient off-plan housing stock to ensure new developments proceed, which keeps australian online slots tradies employed and the economy growing. A massive foreign buyer tax acts as a significant disincentive, limiting much needed supply.
As a result, I cannot see how the foreign-buyer tax is the right fit for the Perth market. Right now, Perth needs to attract buyers, not frighten them off with enormous taxes.
In a flying market where foreign speculators are outbidding local buyers a special tax on non-residents makes some sense, but to justify it “because the east coast does” when our property markets operate so differently is reckless, unimaginative and bad policy that damages our economy.
The government’s 75 percent stamp duty rebate available to investors buying off the plan for developments yet to get under way is a great way to bring on more supply, support tradies and create jobs. This incentive is due to end in October this year but should be extended at least until supply begins to meet demand.
If the government want to address rental affordability then ditching the foreign buyer tax and keeping the off-plan 75 percent stamp duty rebate for would help.
The National Hotel and St. Patrick’s Community Support Centre hold their annual long table dinner event each November to raise much-need funds to assist those without a place to call home. This year’s was a cracker and a shout-out to Karl and Janine Bullers for their inspiration. You see evidence … Read more
The media and government have thrown about the phrase ‘housing crisis’ in recent times to highlight the challenges of Australia’s housing market. The overuse of a slogan can reduce the seriousness of the challenge of housing affordability. Last week, the federal government finally got legislation through the parliament designed to … Read more