WA government's changes to the FHOG unlikely to provide any boost to construction: David Airey
I welcome the decision by the state government to maintain the stamp duty exemption for first-home buyers but I am disappointed by changes to the First-Home Owners Grant (FHOG).
Maintaining the stamp duty exemption for first-home buyers is a huge saving to many people, but slanting the FHOG towards new construction and away from established dwellings will not produce the outcome the government is expecting.
The Treasurer adjusted the FHOG from $7,000 to $3,000 for the 70% of people who purchase an existing dwelling. New-builds will receive a boost of $3,000 to a grant of $10,000.
In defending the policy shift Premier Barnett said it would help stimulate construction and provide more homes.
That argument is not supported by any evidence from over east where other states have already gone down a similar path.
Building a new home is a lifestyle decision that around 30% of first-home buyers are attracted to. It is not a decision based on cost.
The policy shift in the application of FHOG is unlikely to have any impact on boosting construction.
More importantly, the building industry doesn’t need any stimulus and is currently flat-out meeting existing demand.
Data from the Office of State Revenue show that for the June quarter, first-home buyer applications for new-builds jumped by 36% on the March quarter.
Grant applications from first-home buyers increased from 1,522 in the March quarter to 2,075 in late July, reaching their highest level since September 2009.
However, the 12.5% increase in land tax for other owners is a kick in the shins for property investors who supply two thirds of rental stock in WA. It will suck an extra $73 million out of their pockets as a punishment for being an investor.
The budget’s projected land tax revenue in 2013-14 is $657 million and is projected to raise an extra $338 million over the forward estimates.
These owners already pay rates to local government for the provision of services yet get nothing from the state directly and subsidise government services which benefit the entire community.
It’s a great concern that the government remains so dependent on property taxes to run the state despite the enormous revenue earnings from resources.
David Airey is president of the Real Estate Institute of Western Australia.
This article was originally published on reiwa.com.
