The WA Labor government have delivered their first state budget, and as Treasurer Ben Wyatt and Premier Mark McGowan have previously indicated, the burden of amending the State’s financial situation will be indirectly shared by all West Australians.
However, from a property investment perspective, the budget was relatively positive as there were no direct increases to property costs for residents of Western Australia.
Damian Collins, Managing Director for property investment consulting company Momentum Wealth said, “there have been no major changes directly effecting domestic buyers which is important for the rebounding industry.”
Lobbying from key property industry bodies such as REIWA and Master Builders WA was taken into consideration by the Government, as they recognised the recovering state of the market, and decided to leave land tax, stamp duty exemptions and first home owner grants unchanged.
However, the property industry wasn’t totally excused from the Government’s search for revenue, with a four per cent foreign owner duty surcharge introduced on purchases of residential property by foreign individuals and entities from 1 January 2019, which aims to increase State revenue by $48 million by 2020/21.
“While there could be a slight impact from this, foreign investment only represents a small proportion of the WA property market, instead, the billions of dollars’ worth of key transport infrastructure spending will put the property market in a strong position to continue its steady recovery,” Mr Collins said.
Positive signs for the property market
“It is also encouraging to also see such positive estimates for the economy which supports our view on the recovery of the residential property market as well,” Mr Collins said.
“We are already seeing increased competition in the market for good property, and confidence in the market is increasing,” he said.
The budget estimates also included an increase in Gross State Product (GSP) at 3%, employment growth forecasted to increase 1.5%, considerably higher than last year’s 0.25% increase, and lastly State Final Demand to continue to contract in 2017/2018 but then increase by 1% the year following.
Increased focus on transport infrastructure
Road and rail infrastructure has been the main tale of the budget with billions of dollars put aside to increase the networks, including 20 key road projects totalling $2.7 billion with the aim at removing congestion, increasing road safety and creating jobs.
The budget announcement also included the identification of the first stage of funding for Labour’s highly publicised ‘Metronet Plan’ with a total of $1.34 billion over the next four years of the project.
“Property owners will also welcome the investment in infrastructure, in particular, public transport infrastructure, as it adds to the amenity of the nearby residential areas and is a strong driver for property price growth as well,” said Mr Collins.
The infrastructure improvements in the first stage include:
- $535.8 million for the construction of the Thornlie to Cockburn line with new stations at Nicholson Rd and Ranford Rd.
- $520.2 million for the construction of a 13.8-kilometre rail extension from Butler to Yanchep which includes new stations at Alkimos and Eglinton.
- Continual planning and detailed design for the next stages including the Morley-Ellenbrook Extension, the Midland Station Project and the Byford Rail Extension.