Missing the mark on long-term issues

After the Federal Budget was handed down in late March, there was some criticism that, while the budget was a step in the right direction, it focused on short-term solutions as opposed to long term.

On May 12, Western Australia’s State Budget had a similar response from industry experts.

Mark Hay Realty Group Principal Mark Hay said the overall reception to the budget was that it was responsible and thought out.

“They’ve certainly introduced quite a few policy-winning points and ticked a few boxes in quite a few areas,” he said.

“So, by and large, we’re comfortable with theshort-term visionary of it.

“Our biggest problem is there is no long-term view – everybody talks about short-term fix.

“They will give out free stamp duty, give you a bonus or drop the deposit in the market but, when you think about it, all that’s doing is creating more competition within a market that already has limited supply.

“It’s going to put more pressure on prices, not the opposite.”

The budget outlines assistance to help new homebuyers buy off-the-plan apartments up to $500,000.

Some property specialists believe this may have a negative effect, given the supply and demand issues WA is currently experiencing with developing new homes.

Dempsey Real Estate Director Mal Dempsey said the reduction in stamp duty to apartments under $500,000 was welcome, as was the land tax concession to facilitate the creation of rental accommodation.

However, he said the high demand in the building industry would be an issue.

“It does nothing to improve supply,” Mr Dempsey said. “Supply is dictated by the availability of trades and materials.

“The State Government needs to become proactive in sourcing essential building materials such as roof timber, door and window frames, for example.”

Mr Dempsey said that when the McGowan Government came to power it introduced an additional 7.5 per cent tax for offshore buyers, which has stopped foreign investment in individual apartments.

“This created a scenario where all new projects are reliant on presales to a local market and vastly reduced the amount of new project completions,” he said.

“So much more could have been done in this budget with a reduction in stamp duty below $1 million, a land tax holiday on all projects under construction and incentives to convert older offices to residential apartments.”

Mr Hay said the general public would be grateful for the assistance, but this State Budget did not address key issues such as housing affordability and supply.

“It’s taking 14 days to sell a property now,” he said. “There’s less than 1000 properties on the market which, in a normal market, should be 13,000-plus.

“We’re really batting below the averages of where we should be. By giving us more incentives, it’s going to create more competition but it should be going the other way.

“We should be doing something for the long-term land developers and builders to try and help them get the product to the market quicker and cheaper.”

Mr Hay praised the incentive targeted at assisting low and middle income earners to purchase medium and high-density housing in inner-city and Metronet precincts.

“They’re putting their money where their mouth is and getting people back on public transport,” he said.

“Typically, in those areas, they’re lower socioeconomic areas where people don’t have to have a car, there’ll be smaller units and that is great.

“That’s also going to attract more business and stimulate more development in those centres.”