WA housing supply addressed by state budget
Western Australia’s state budget this week introduced measures to ease pressure on the housing supply crisis, but the UDIA is advocating for more to be done.
Perth holds the mantle as one of the most affordable capital cities in Australia, however following Thursday’s State Budget, handed down by Premier and Treasurer Mark McGowan, the jury is out on how long that mantle will remain.
With the State amid a housing supply crisis, the McGowan Government’s budget has tinkered at the edges of a complex issue that requires a greater focus on driving housing supply across the continuum and a greater willingness to take long term action in relation to major taxation and regulatory reform.
In short, the measures introduced in this Budget are very much welcome, we just hope there is more to come.
In particular, Urban Development Institute of Australia (UDIA) WA is pleased that the government has heeded our calls for more support for the built form sector. WA’s medium and high-density markets have almost ground to a halt in recent years as it has become harder and harder to ensure financially viable projects in the context of rising skills and materials costs.
The extension of the Off-the-Plan Transfer Duty Rebate for another two years and changing the incentive from a rebate to a concession is a direct response to UDIA WA advocacy and will provide certainty for both developers and buyers looking to purchase an apartment off-the-plan.
The Off-the-Plan rebate was available for people who enter a pre-construction contract to purchase a new residential unit or apartment off the plan. Making the rebate a legislated duty concession means that purchasers will have their stamp duty concession recognised up front at contract stage rather than having to pay the duty and then claim the rebate upon settlement.
For apartment projects in particular, developers rely heavily on presales to make a project viable, so these measures will assist in building much needed consumer confidence and attracting investors to this sector of the market.
Combined with already announced land tax concessions for Build-To-Rent which are now supported by recent Federal Government taxation changes, future supply of rental accommodation is also looking brighter following the budget announcements.
This week’s budget makes an ongoing Investment in social housing while also continuing to use Keystart as a lever for the provision of more affordable housing.
Keystart is a low deposit lender aimed at providing an affordable pathway to home ownership in WA.
Amendments will be made to Keystart’s pilot ‘Urban Connect’ program, which boosts housing at the affordable end of the market and supports infill development, which will now also enable customers to secure pre-sale off-the-plan properties.
Aligned with UDIA WA’s recommendation, one-bedroom apartments will be eligible for the Urban Connect program.
UDIA WA would have liked to see a lift to the cap on home values for the standard Keystart loan products with indexing against increases in median house prices and we will continue to advocate for those changes, as outlined in our State Budget submission.
Other small wins in the budget include investment in attracting more skilled migrants to the building and construction sector and further investment in social housing and homelessness.
Work still to be done
The missing piece remains a systemic view of the provision of housing supply across the spectrum and the support required to help people transition between housing types as their needs and life circumstances dictate.
The government’s reliance on the 27,500 dwellings under construction to fix Perth’s housing supply crisis is concerning given increasing migration to Perth and Western Australia. That expected population increase, combined with underlying local demand that is currently suppressed due to lack of consumer confidence in the housing construction sector, will push up housing demand in coming years.
UDIA WA has suggested that there is a unique opportunity to leverage Federal Government funding under the Housing Australia Future Fund and other incentives for the State’s to provide more social and affordable housing supply.
A dedicated focus on the provision of affordable and key worker accommodation and subsidised private rental initiatives are a missing piece of the puzzle at present and need urgent attention.
Perth’s relative affordability to other major cities around the country is a mantle that could easily be lost and sooner rather than later.
Whilst house prices have remained relatively stable, extremely low levels of established housing stock for purchase and rent are already pushing median rents up with price pressure expected to increase in the established and new housing markets.
All options must be on the table to reduce the cumulative impact and cost of regulation, taxation, and overly complex lengthy approvals processes on the delivery of housing supply.
All levels of government for decades have had their foot on the hose of housing supply, which is now down to a trickle.
It’s time to work collaboratively to open up the pipeline.