Western Australia’s newly introduced foreign buyers surcharge isn’t likely to help the state’s floundering property market, according to the Reserve Bank of Australia.
Foreign investors must pay a 7% surcharge on residential property purchases in WA. Picture: realestate.com.au/buy
Speaking at an Urban Development Institute of Australia WA event, RBA Assistant Governor Michele Bullock said the new levy, which was introduced by the WA Government in January, would not help the state’s sluggish property status.
Bullock said the surcharge had the potential to help “take the edge off” in periods of very strong growth, but that was not the case for WA’s current market.
“I would only observe that given the WA market was not particularly buoyant to begin with, putting a tax on it wouldn’t seem to help that circumstance,” she said.
Under new laws, foreign investors must pay a 7% surcharge on residential property purchases in WA. The plan is expected to raise about $120 million over the next four years to boost WA Government coffers.
UDIA WA has been a vocal opponent of the surcharge and last year called for it to be deferred until the market has recovered from its current downturn.
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UDIA WA Chief Executive Officer Tanya Steinbeck said while the institute understands the government’s decision to boost the State Budget in the short term, it has adversely affected the market in the longer term.
“We are yet to see serious signs of a recovery and, given foreign investment in the property market is integral to the success of the market and the wider WA economy, we have strongly urged the government to remove the tax as it directly detracts from new investment in WA property,” Steinbeck said.
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Bullock told the event the RBA was encouraging banks to “think about loosening up lending standards”, a call Steinbeck said the property industry would support.
“Given more positive population growth projected moving forward, UDIA is certainly expecting a return to more positive growth in the property market in the next 12 to 18 months,” Steinbeck said.
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“WA is on the precipice and it will take all stakeholders including government, banks and industry working together to create a supportive environment for growth.”