WA budget delivers mixed bag for property owners/investors
The abolition of part of the first home owners grant and higher land taxes has been offset by the Barnett government’s $24.1 billion infrastructure investment program.
The recent Western Australian budget didn’t deliver any major new incentives for property owners and investors, however the state’s commitment to big-ticket infrastructure projects will buoy confidence.
One of the more disappointing aspects of the May budget was the removal of the $3,000 first home owners grant (FHOG) for established homes.
The $10,000 grant for first home buyers who build new homes still remains, though, and in both cases stamp duty is exempt for homes costing less than $430,000.
However, the decision to cut the grant for established dwellings, and keep the grant for new developments, will lead many first home buyers to purchase properties in new housing estates on the urban fringe.
This is likely to place more pressure on Perth’s already strained infrastructure and defies the WA government’s objectives to increase urban infill development and slow urban sprawl.
Property owners and investors have also been hit by the state government’s decision to increase land taxes.
However, even with the hikes, WA’s land tax still remains among the lowest throughout Australia.
Despite these drawbacks, the confidence of property owners and investors should be buoyed by the state’s commitment to big-ticket infrastructure projects.
The May budget allocated $24.1 billion to the state’s infrastructure investment program over the next 4 years.
This includes about $6.2 billion in the 2015/16 financial year.
The funding for the infrastructure investment program includes many projects that have already started construction including the Perth Stadium, Elizabeth Quay and the Gateway WA road project.
However, it also includes many other projects that are in the advanced planning phase including the $2.2 billion Forrestfield Airport Link and the $1.6 billion Perth Freight Link.
WA’s massive infrastructure investment program will directly result in the creation of more than 93,000 jobs within the Perth metropolitan area, as well as thousands more indirect jobs created for offsite suppliers and services.
Not only will this continue to stimulate the state economy, but these infrastructure projects, along with local government revitalisation initiatives, will help to underpin house price growth over the longer term.