Western Australia's dramatic downturn in sales activity — from 89,000 in 2005 to 39,000 in 2018 — appears to be a clear indication of the state's flailing property market, signalling the need for policies that could make it attractive again for homebuyers and investors.
The Real Estate Institute of Western Australia has outlined a six-point plan that would address the state's problems. The first recommendation is to increase the stamp duty exemption threshold for first-home buyers.
"With first-home buyers accounting for a third of all residential property transactions in WA, the stamp duty exception limit should be increased from $430,000 to $550,000," REIWA president Damian Collins said.
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Adjusting the threshold would enable first-home buyers to purchase established properties closer to the city, since this will open up 49% of properties in the Perth central sub-region.
In line with this, Collins said there is also a need to reintroduce the $7,000 First Home Owner Grant (FHOG) for established properties to encourage more first-home buyers to participate in the market.
In 2018, the number of first-home buyers in WA reached its lowest levels since 2011 — only 8,511 purchased established properties and 6,246 got new homes.
"By reintroducing the $7,000 FHOG for the purchase of existing dwellings, all West Australians will get a helping hand into their first home, regardless of what they choose to buy," Collins said.
REIWA also suggested the introduction of a $10,000 concession on stamp duty for members of the senior population. This will help seniors over the age of 65 to be able to find properties that can cater to their changing lifestyles.
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Additionally, the six-point plan tackles the removal of stamp duty penalty for off-the-plan purchases.
"REIWA calls for an off-the-plan concession to allow stamp duty to only be payable on the land component alone, which brings it in line with the current house and land purchases, reduces urban sprawl and promotes infill developments," Collins said.
To attract more foreign investors, Collins said the government also needs to revoke the foreign-owner duty surcharge. Currently, the WA property market attracts the lowest number of foreign investors amongst all states.
"Foreign investors play a key role in the delivery of off-the-plan projects, which creates construction jobs for thousands of West Aussies, which is why REIWA recommends that the 7% foreign owner duty surcharge be revoked to keep the WA property market competitive," he said.
Last on the six-point plan is REIWA's recommendation for a state-tax review.
"It is important to our economy that the government assesses the viability and financial implications of shifting to a broad-based land tax system that ultimately removes stamp duty," Collins said.
