Housing affordability an issue in WA, despite favourable buying conditions

REIWA President Hayden Groves via reiwa.com.au

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

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 2017, it had declined when compared to the September quarter 2017.

It’s concerning that despite favourable buying conditions and record low interest rates, housing affordability remains such a pertinent worry for many West Australians.

State property taxes are a barrier

REIWA is a strong advocator for addressing housing affordability, and we firmly believe current state property tax arrangements significantly contribute to this problem.

When REIWA surveyed the WA public about this topic last year, respondents overwhelmingly told us that property taxes negatively impact their lives. This is a growing issue and we need to do something to address it.

Home ownership still attainable in WA

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 find it more difficult 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 out of any state or territory in Australia, with the Housing Affordability Report revealing 34 per cent of all owner-occupier home loans in WA in the December 2017 quarter were to first home buyers.

Additionally, although the average home loan amount to WA first home buyers increased during the December 2017 quarter, it was still $50,000 more affordable than the average loan amount required in NSW. A considerable difference.

However, more needs to be done. While the McGowan Government continues to face 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 of funding essential services that doesn’t impact so heavily on affordability.