MEMBERS of the property industry are disappointed with this morning’s Budget announcement that the State Government will increase the upcoming surcharge on foreign residential property buyers from four per cent to seven per cent.
The four per cent surcharge had been due to be implemented in January next year.
The Urban Development Institute of Australia (UDIA) said it would jeopardise much-needed investment in WA.
“UDIA is strongly opposed to the new foreign investment tax as it will stifle much-needed foreign investment into this state, undermining the creation of new jobs and our economic recovery,” chief executive Allison Hailes said.
“The fact that WA is one of the only states not to have a foreign buyers surcharge is a huge competitive advantage and we should be maintaining that to encourage more overseas investment, not turning it away.”
Ms Hailes said the WA residential property market played a major role in supporting the struggling state economy and the new tax on foreign investors would have a negative impact in the long term.
“To put a further impediment in the way of the small amount of foreign investment we have now will be detrimental to our property market recovery and its ability to provide a much needed stimulus to the broader WA economy,” she said.
“With market conditions as they are, we think it is imperative that the government rethinks this flawed policy and instead works with industry to ensure that the urban development sector is supported in its role of building a prosperous future for WA.”
REIWA had previously expressed its opposition to a foreign buyer surcharge.
In its pre-budget submission to the State Government it called for the tax to be revoked or deferred.
Mr Groves called the increase a blow for the property market saying it was shortsighted and would have far-ranging consequences for a market that was just starting to show signs of a recovery.
“This will deter much needed investment in the state, while doing nothing to make housing more affordable for West Australians, in fact rent prices could increase due to a lack of stock as investors look elsewhere,” he said.
“This policy measure also puts construction jobs at risk, as off-the-plan developments usually rely on securing a portion of pre-sales from foreign investors before funding can be secured.
“While this does not affect large-scale apartment development, it contradicts the WA Government’s push for more medium density housing.
“Deterring foreign investment means these projects may never eventuate, costing WA jobs.
“The short-term financial gain of this surcharge is likely to be counteracted by long-term losses as investors seek an alternative place to invest.”
Master Builders director Michael McLean said that although the increase in the foreign investment tax on residential property from 4 per cent to 7 per cent may align with some other states, it was not appropriate in the context of WA’s depressed property market.