The WA Labor Government has delivered its first state budget and, as Treasurer Ben Wyatt and Premier Mark McGowan previously indicated, the burden of amending the state’s financial situation will be indirectly shared by all Western Australians. However, from a property investment perspective, the budget is relatively positive, as there are no direct increases to property costs for residents of WA.
Momentum Wealth managing director Damien Collins said there had been no major changes directly effecting domestic buyers, which was 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 it recognised the recovering state of the market and decided to leave land tax, stamp duty exemptions and first homeowner grants unchanged. However the property industry wasn’t totally excused from the government’s search for revenue, with a four percent foreign owner duty surcharge introduced on purchases of residential properties by foreign individuals and entities from January 1, 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,” Mr Collins said. “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.”
Positive Signs For The Property Market
“It is also encouraging to 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.” The budget estimates included an increase in Gross State Product (GSP) at three percent, employment growth forecasted to increase 1.5 percent – considerably higher than last year’s 0.25 percent and, lastly, State Final Demand to continue to contract in 2017/18, but then increase by one percent 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 included the identification of the first stage of funding for Labor’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,” Mr Collins said.
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 Road and Ranford Road.
- $520.2 million for the construction of a 13.8km rail extension from Butler to Yanchep, which includes 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.