Tax burden hits affordability
Although housing affordability has improved in WA in recent times, it remains a legitimate concern for many.
A recent Housing Affordability Report by the Real Estate Institute of WA and Adelaide Bank showed while affordability improved in WA on an annual basis in the December quarter of last year, it had declined when compared to the previous September quarter. This represents the second quarter in a row affordability has declined.
Given current market conditions, which undoubtedly favour homebuyers, and record low interest rates, it is concerning housing affordability remains such a pertinent worry for many West Australians.
REIWA is a strong advocate for addressing this issue, and firmly believes State property tax arrangements contribute significantly to this problem.
REIWA surveyed the WA public about this last month, and the response confirmed our position, with respondents overwhelmingly saying property taxes negatively affected their lives. Clearly, something needs to change.
The good news is WA remains one of the most affordable States in the country for housing, particularly in comparison to east coast property markets such as NSW, where the median house price is higher and firsthomebuyers struggle to enter the property market. Here in WA, homeownership is still very much attainable.
In fact, we have the highest proportion of first-homebuyers in Australia, with the Housing Affordability Report revealing 21 per cent of all owner-occupier home loans in WA in the December quarter were to first-home buyers.
Home loans to first-homebuyers in NSW made up only 8.2 per cent of all loans during that same period.
However, more needs to be done.
While the new Labor Government faces a challenging fiscal environment, REIWA still believes an incremental reform of property taxes will encourage both owner-occupation and investment.
Transfer duty is one of the most inefficient and ineffective taxes.
In the long term, we would like to see the Government transition to a broad-based land tax instead of relying on transactional taxes.
We call on the McGowan Government to commit to conducting a State tax review and to look at more sustainable ways to fund essential services in WA. Hayden Groves is the president of the Real Estate Institute of Western Australia.