Why the WA government wants small developers to succeed

Wednesday, 4th Jun 2014


Governments at all levels, but particularly the state government, recognise that WA needs to produce more housing to keep up with our booming population.

This means that when it comes to buying real estate, they want people to build or buy new homes, as this generally adds to the overall stock of housing.

There’s another reason the government wants us to build homes. It’s because construction activity is good for the economy as it creates jobs and demand for a whole variety of goods and services.

In the recent WA state budget, the government decided to reduce the threshold at which first home buyers pay stamp duty from $500,000 to $430,000, which will come into play from 1 July 2014.

This change will clearly make it harder for some first-home buyers to get into the market. But interestingly, the government didn’t change the stamp-duty-free threshold for the purchase of vacant land. Buyers will pay no stamp duty for land up to $300,000 in value, and the exemption phases out at $400,000.

This move will clearly encourage many first-home buyers to build a new home rather than buy an established one.

Last September the government again reoriented the first-home buyer market by slashing the First Home Owner Grant for people wanting to buy established properties to a meagre $3,000, while increasing the grant to $10,000 for new homes.

Put these two recent “tweaks” together and you get a fairly clear picture of the government’s priorities. They want to encourage first-home buyers to buy, or better yet, build a new home, which is good news if you’re a developer targeting first-home buyers.

With local councils urged by the state government to increase infill development throughout Perth’s established suburbs, there are many excellent sites waiting to be developed.

And thanks to government incentives (and disincentives) for first-home buyers, if you hit the right price point you could easily have buyers lining up at the door.