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Concerns that one state government may change stamp duty legislation in the upcoming Budget have sparked warnings from the industry.
According to Real Estate Institute of Western Australia (REIWA) president David Airey, pressure on the state government to cut costs and raise revenue may cause increased stamp duty costs and the removal of stamp duty exemptions for first home buyers.
“The property market in WA is only just stabilising after several volatile years, while current REIWA data indicates a market downturn for the second half of this year.
“It’s critical that current policy settings remain in place and property taxes are not increased, distorting a fragile market,” Mr Airey said.
Mr Airey labelled the stamp duty exemption, introduced in 2007, as "extraordinarily successful" for keeping the property market afloat.
“Cost of living and housing affordability is much tougher in WA than it is in other states, but removing the stamp duty impost from first home buyers saves most of them around $14,000 and helps them get into a home of their own.
“In combination with low interest rates first home buyers have flourished in WA, but the signs are that this is now trending downwards and it would be devastating if they soon get hit with stamp duty,” Mr Airey said.
Speaking with Real Estate Business, director of Abel McGrath Property Group, Adrian Abel, said that even the top end of the market will be hit hard if first home buyer exemptions are removed.
"Stamp duty is the number one deterrent to real estate transactions," Mr Abel said.
"I transact over $100 million in property each year, but I still talk to clients who would prefer to renovate rather than relocate because of the costs of stamp duty."
While he believes raising stamp duty would be an unlikely event, other states have removed or reduced the aid given to first home buyers.
"It's a very real threat to the market if the exemption is removed, even at the $1 million-plus end of the market," Mr Abel said.
"It's like a ripple effect. When demand for the lower end of the market drops, it flows on to the next tier of upgraders and investors, until the whole market feels it."
Mr Abel also believes sentiment would be damaged through media coverage if first home buyers are dealt a poor hand from the Budget.
- <p>Kim, "THATS" why they are in the Public Service and not private enterprise.<br>They have no "street smart or common sense" when thinking through these changes.</p>0
- <p>I recall some years ago the state government increasing the tax on "something", can't specifically recall what it was though. Net result was the government had a decrease in revenue because of a decrease in transactions i.e. 100 transactions x $10 was greater than 20 transactions x $20. Effectively killing the golden goose. Let's hope short sighted public servants don't make the same mistake and increase stamp duty.</p>0
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