Delayed but not destroyed
The state’s peak real estate and property body has added to recent commentary that COVID-19 has delayed but not destroyed the long-awaited recovery of Perth’s property market.
But in the same breath the Real Estate Institute of WA warned the recovery would need significant support, sustaining calls to reform the stamp duty tax and remove or soften this costly barrier to homebuyers.
REIWA announced on Tuesday that residential listings for sale and rent in WA on its site were the lowest they had been in six years with available stock dropping, not rising, during the COVID-19 restriction period.
There are almost 30 per cent fewer properties currently for sale than there were at this time last year and the same goes for rentals, with the vacancy rate at only 2.4 per cent.
The average discount accepted by sellers has reduced to seven per cent, 0.5 per cent lower than May last year.
REIWA president Damian Collins said due to the lower than normal stock levels and reduction of discounting, there should not be any major downward price pressure and it was likely the current median price of $477,000 would remain relatively stable over coming months.
The state’s economy was bouncing back much quicker than many experts thought and it was unlikely the property market recovery would be reversed.
“While it’s still not a great market it’s now almost normal in terms of volume, every day the volume of rental stock is dropping … quite significantly,” Mr Collins said.
“Going into COVID-19 there were still some downturn risks but those have really dissipated, and barring a second wave I am struggling to see any risk of downward pressure.”
Mr Collins sustained calls for the state to ensure continued recovery through reforming stamp duty, which could add tens of thousands to the cost of a new house.
A major government revenue stream when the market is healthy, stamp duty is nevertheless seen as an inefficient revenue-raiser, because in difficult times that revenue drops while the barrier it represents to homebuyers stays high.
Long-term replacement of stamp duty with broad-based land taxes phased in over a period of years has started in the Australian Capital Territory and is being discussed in Victoria and New South Wales.
Recently Opposition Leader Liza Harvey released a six-month plan to kickstart WA’s economy, including a 75 per cent cut in stamp duty for house and land packages, and urged the government to keep significant permanent reform on the table.
But Premier Mark McGowan ruled it out and said replacing stamp duty with a rate on every household would not help the economy.
Mr Collins said the amount per property would in fact need to be less than $1000 to make the same amount of revenue, and Mr McGowan’s response did not take into account the possibilities of a long-term, phased approach to a broad-based land tax that made use of exemptions and options such as allowing people to choose whether they paid a lump sum or annual amount.
He said there was pressure on both sides of politics to come up with alternatives for what “every side agress is not a good tax”.
“It penalises people who move, it’s got nothing to do with wealth or income … even Victoria and New South Wales are saying they want to get rid of it so there are opportunities there for WA politicians to take a brave stance, this is the time,” he said.
Mr Collins’ comments followed prominent Perth developer Paul Blackburne saying WA’s market recovery might be delayed a few months but, he believed, would recommence by spring and would not mirror the pain the eastern states faced.
And on Friday, WA’s biggest apartment developer Finbar’s managing director Darren Pateman also said there could be reasonable confidence that WA stood to recover quicker from the COVID-19 crisis than other states.
Mr Pateman called on the government to extend a rebate beyond off-the-plan sales to projects under construction and new completed stock, to encourage commencements and allow capital to be redirected to new projects.
The Urban Development Institute of Australia WA also on Friday called for long and short-term reforms to the tax in the wake of glum new housing commencement forecasts.