State budget – Steady as we go

A slowing economy,  cooling investment environment and the mining industry’s economic transition from construction to production and export is behind the state’s largest-ever deficit, forecast at $3.9 billion.  

The gloomy outlook, with subdued growth expected over the short to medium-term, produced a relatively non-eventful and safe budget; however, there was some welcome news for the property industry.

Property taxes

With land tax having triggered significant electoral angst over the last three state budgets, property owners welcomed the news of no further significant increases to property taxes for the 2016-2017 fiscal year. The $10,000 first home-owners grant for new properties was also maintained.

Unfortunately the budget contained no consideration of broader tax reform to stimulate the struggling property market, in particular reversing some of the land tax increases of the last few years and additional exemptions for stamp duty.

The only increase in taxes announced in the budget related to the Perth Parking Levy, with an increase of 2.5 per cent or $38.30 for tenant bays, commencing 1 July 2016.

Infrastructure to fuel growth

As the state continues to suffer from a critical lack of key infrastructure, the announcement of the $5 billion infrastructure fund was timely. Transport infrastructure receives the greatest investment, with funding set aside for key projects including:

  • $2 billion for the Forrestfield-Airport Link, scheduled to begin operations in 2020
  • $1.5 billion towards the Perth Freight Link, due for completion in 2021-22
  • $427 million towards the $1.9 billion MAX Light Rail project, a key project allowing the delivery of high-density developments in the northern corridor of Perth.

With $5 billion in funding coming from the proposed sale of Western Power it is essential for the government to win support for its privatisation plans and ensure delivery of this sorely needed infrastructure.

Property Council launches #designperth

A joint initiative of the Property Council of Australia, the Greens, Curtin University and architectural design firm CODA the report, #designperth,  with its vision for a connected and sustainable Perth, canvasses cutting-edge infill development and urban regeneration for Perth’s transport corridors.
As Perth struggles to keep pace with the required density targets, the timing of the report is critical.

Findings included:

  • Urban infill development on key routes is markedly cheaper than stand-alone greenfield development – for every 1,000 dwellings developed in infill sites, a saving up to $94.5 million could be achieved
  • Achieving Perth’s 47 per cent infill target by 2050 will deliver savings up to $13 billion
  • Precinct-wide case studies based on infill development showed that local employment rose by 352 per cent and public open space increased by 187%.

Among key recommendations were:

  • The establishment of an independent state infrastructure body
  • Reform of the Strata Titles Act.
  • A requirement that Perth local governments modernise their local planning schemes
  • The re-establishment of the National Housing Supply Council.

Next article: A message from our Global Head of Real Estate & Construction.