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    REIWA's 2020-21 budget analysis

    Western Australian Treasurer Ben Wyatt MLA has delivered the 2020-21 State Budget.

    Job creation is the focus for the coming year, with the announcement of record infrastructure spending of $27 billion and a further $7.5 billion for regional infrastructure projects.

    Despite a decline in government revenue of $1.7 billion, the higher than expected iron ore price allowed WA a small surplus of $1.66 billion.

    House prices

    The median house price fell by 2.5 per cent in 2019-20.  Budget estimates predict a small increase of 0.7 per cent in 2020-21, and an increase in 1.8 per cent in 2021-22. The WA Government predicts an increase in migration in 2022-23 that will contribute to a significant increase in the median house price of 4.1 per cent and a further 4.3 per cent increase in 2023-24.

    Investment in housing

    Dwelling investment fell by 13.1 per cent in 2019-20, but is forecast to lift by 0.75 per cent in 2020-21 and a further increase of 13.25 per cent is predicted in 2021-22, followed by a sharp decline of 17 per cent in 2022-23 as government stimulus measures come to an end.  

    Property taxes

    Transfer duty

    There have been no changes to the rate of transfer duty for 2020-21.

    Total transfer duty increased by 20.3 per cent (or $224 million) in 2019-20, primarily due to several high-value commercial property transactions but is forecast to decline by 5.3 per cent (or $70 million) in 2020-21.

    Lower duty in 2020-21 reflects an expected return in the total value of high-value commercial property transactions to more normal levels, and a tapering-off of dutiable residential transactions in the second half of the year in both the established house and land markets, as restrictions on international migration dampen demand and the State and Commonwealth housing construction stimulus measures unwind.

    Weaker demand is expected to persist through the first half of 2021-22, with total transfer duty forecast to decline by a further 3.2 per cent  over the financial year before recovering in the outyears, in line with a gradual recovery in migration and improved labour market conditions.

    Total transfer duty is expected to grow at an annual average rate of 12.8 per cent in 2022-23 and 2023-24. Notwithstanding this, total transfer duty in 2023-24 is still projected to be around 20 per cent lower than at the height of the most recent property cycle in 2013-14.

    Land tax

    The WA Government has made no changes to the dutiable rate of land tax for 2020-21.

    Total land tax collections are forecast to decline by $22 million (or 2.5 per cent) to $857 million in 2020-21 due to a fall in taxable land values across WA. This follows a $17 million (or 1.9 per cent) fall in 2019-20.

    Foreign Owner Duty Surcharge

    The Foreign Owner Duty Surcharge will remain at seven per cent for 2020-21. 

    The Foreign Owner Duty Surcharge generated $19 million in revenue in 2019-10.  This is predicted to remain steady, in 2021-22 increasing to $25 million in 2023-24.

    Off-the-plan stamp duty rebate

    There has been no change to the rebate for off-the-plan purchases above the initial extension that saw the rebate extended for purchases of for contracts entered into between 4 June 2020 and 31 December 2020 for a unit or apartment that is already under construction.

    The original is available to owner-occupiers and investors who enter a preconstruction contract between 23 October 2019 and 23 October 2021 to purchase a residential unit or apartment in a multi-tiered strata scheme.

    Business taxes and regulation

    The government has committed $2.3 million to simplify the approvals process within local government. This will coincide with significant planning reforms.

    Small and medium size business will benefit from the previously announced increase in the threshold for the exemption of payroll tax to $1 million. This will see 300 business exempted from the tax all together, while a further 11,000 companies will see their tax bill reduced. 

    For more information, please contact REIWA Advocacy at [email protected] or on 9380 8241.