The Property Council of Australia has urged whoever is appointed the next Treasurer of Western Australia to commit to a comprehensive review of all property taxes by 2025.
The call comes as Perth’s rental vacancy rate has hit its lowest level in 40 years and with house prices tipped to increase by up to 15 per cent over 2021.
According to Sandra Brewer, WA Executive Director, the challenge now facing the State is to ensure the tax regime does not create affordability challenges as the economy and property values grow.
“Our most recent ANZ/Property Council Confidence Survey recorded an uptick in confidence in the WA residential property market,” Ms Brewer said.
“However, the disproportionate taxation levied at international investors and new migrants, construction and labour shortages, the end of stamp duty concessions for under-construction apartments, and the looming end of other apartment concessions could exacerbate market pressures.”
According to data released today by the Australian Bureau of Statistics, there has only been moderate wage growth over the past year, with the WA Wage Price Index increasing by just 1.4 per cent.
“Western Australians allocate roughly ten per cent of their total income to savings. To cover the costs of stamp duty alone, the average Perth resident needs to bank every cent of savings for more than two years,” Ms Brewer added.
“The problem is widespread. Across the Perth metro area, stamp duty repayments equal on average 11 weeks of full-time wages based on the average household earnings in each suburb.”
“This figure increases dramatically in the inner suburbs. In suburbs like Subiaco, saving for stamp duty requires 25 weeks for full-time wages based on the average household taxable income.”
The State Government raises $1.1 billion in transfer and stamp duties alone each year. Stamp duties, land taxes, GST and large development levies can constitute as much as 26 per cent of the total cost of a finished house and 21 per cent of a finished apartment.
“The stimulus measures provided during the pandemic were highly effective, particularly for greenfield development. Reintroducing stamp duty concessions for apartments under construction would go a long way to helping level the playing field and support short term housing challenges,” Ms Brewer said.
“The reality is, over the long term, ongoing stimulus isn’t a solution to solving the impediments to affordable housing. As we continue to grow, tax reform will be a vital mechanism that can help more people avoid the rental crunch and gain the keys to their own home.”