HIA : Foreign investor tax a retrograde step for Western Australia
The imposition of any stamp duty surcharge on foreign investors would be a retrograde step for the WA economy and a missed opportunity to differentiate WA from the rest of Australia in terms of property investment and would hit local tenants.
“Foreign investment in new residential property enables more homes to be built,” said John Gelavis HIA Executive Director, WA.
“It brings forward residential construction and helps finance the commencement of residential projects that might not otherwise proceed.” “That means more homes for rent and less pressure on rental prices.”
“It also means more jobs for Western Australians and a boost in economic activity for the state of Western Australia,” said Mr Gelavis “HIA is opposed to foreign stamp duty surcharges due to the fact that they depress demand for new dwellings, resulting in fewer being built. They also increase the cost of supplying dwellings to the rental market, and are likely to push up rents and restrict supply,” said John Gelavis.
“The imposition of any foreign investor stamp duty surcharge is likely to negatively impact new dwelling supply at a time we can least afford it, in particular for apartments. The influence of foreign investor demand has been important in stimulating new building supply in this area of the market for WA. To suggest taxing this supply chain will have no effect on future rental prices, vacancy rates and investor confidence seems unrealistic at this point in the property cycle. The estimated $21 million in revenue from this measure assumes the strong supply of new dwellings is maintained.”
“The median dwelling price in Perth was $490,000 during December 2016. With a foreign investor surcharge of 4 per cent, this would mean a stamp duty bill of $36,890 compared with $17,290 for a domestic investor. The foreign investor’s stamp duty bill is equivalent to an additional $2,527 in annual mortgage repayments over 30 years. A substantial portion of this is likely to be passed onto tenants in the form of higher rents,” continued Mr Gelavis
“Right now in the current property cycle Western Australia needs to be open for business and encourage foreign investment in order to not only stimulate building supply but assist in rebuilding the state economy and delivering an increased level of investor confidence,” concluded John Gelavis. This will be a major talking point at the HIA CMI Political Debate Luncheon on this Thursday, 23rd February with senior members of both parties participating.