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  • Housing affordability still an issue, despite favourable market conditions

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    Author: REIWA President Hayden Groves

    Although housing affordability has improved in WA in recent times, it remains a legitimate concern for many West Australians.

    Housing Affordability Report

    A recent Housing Affordability Report by the Real Estate Institute of Australia and Adelaide Bank showed while affordability improved in WA on an annual basis in the December quarter 2016, it had declined when compared to the September quarter 2016. This represents the second quarter in a row affordability has declined.

    Given current market conditions (which undoubtedly favour home buyers) and the record low interest rates, it’s concerning housing affordability remains such a pertinent worry for many West Australians.

    REIWA is a strong advocator for addressing this issue, and we firmly believe current state property tax arrangements significantly contribute to this problem. REIWA surveyed the WA public about this last month, and the response we received reiterated our position, with respondents overwhelmingly confirming that property taxes negatively impact their lives. Clearly, something needs to change.

    Favourable buying conditions on the West Coast

    The good news is; WA remains one of the most affordable states in the country for housing. Particularly in comparison to east coast property markets like NSW, where the median house price is higher and first home buyers struggle to enter the property market. Here in WA, home ownership is still very much attainable.

    In fact, we have the highest proportion of first home buyers in the market out of any state or territory in Australia, with the Housing Affordability Report revealing 21 per cent of all owner-occupier home loans in WA in the December quarter were to first home buyers. To put that into perspective, home loans to first home buyers in New South Wales made up only 8.2 per cent of all loans during that same period - less than half the proportion of WA.

    Additionally, the average home loan amount to WA first home buyers was $60,000 less than the average loan amount required in NSW for the three months to December 2016. A considerable difference.

    However, more needs to be done.

    Tax reform required in WA

    While the new Labor Government faces a challenging fiscal environment, REIWA still believes an incremental reform of property taxes will encourage both owner occupation and investment.

    The residential property market is a key contributor to state revenue, specifically through transfer duty – one of the most inefficient and ineffective taxes. In the long term, we would like to see the Government transition to a broad-based land tax instead of relying on transactional taxes for revenue.

    All West Australians deserve to have access to affordable, accessible and appropriate housing stock. We call on the McGowan Government to commit to conducting a state tax review, to look at more sustainable ways to fund essential services in WA that doesn’t impact so heavily on affordability.