15 May 2015 – REIWA.com

The Real Estate Institute of Western Australia has criticised the decision by the State Government to axe the First Home Owners Grant (FHOG) for established homes in Thursday’s Budget, but welcomed the retention of their stamp duty exemption.

REIWA President David Airey said being exempt from stamp duty for homes under $430,000 is a huge benefit to all first time buyers.

“It’s a real cost saving and I’m pleased this threshold has not been lowered,” he said.

The $10,000 grant for first home buyers who build a new home will remain in place.

“This decision is pushing many first home buyers to the urban fringes, contrary to the State Government’s own urban infill policy.

“By aiming the FHOG to new constructions only, first home buyers who want more affordable, established homes in older suburbs are being disadvantaged.

“This creates an imbalance in the housing market and adds to urban sprawl,” Mr Airey said.

The changes to the FHOG will not take effect until amending legislation is passed by Parliament, which is expected to occur during the latter half of 2015.

Mr Airey said the Government’s argument that the FHOG policy was geared towards providing more housing was flawed, because Perth was currently oversupplied with dwellings.

“Supply is not the issue in WA, affordability is the issue and making it harder for first home buyers attracted to existing stock makes no sense,” he said.

According to the Office of State Revenue, the median purchase price of established homes across WA for first home buyers in April was almost $440,000.

Mr Airey was more scathing of the third consecutive budget increase in land tax.

“It’s dreadful that the Government is increasing land tax by lifting tax rates and adjusting thresholds. This move will generate $826 million for the Government over the next four years.

“This tax, especially for commercial properties, will be passed on to tenants through increased costs across the board,” he said.

Mr Airey said the huge hike in land tax was another illustration of the State Government’s heavy reliance on property taxes to fill treasury coffers.

“Once again I call on the Government to have a mature, long overdue discussion with businesses and the wider community with regard to completely reforming the property tax system.

“In particular, we need to abolish stamp duty and, over time, replace it with a modest land tax across all owners, as recommend by the Henry Tax Review,” Mr Airey said.

View the 2015-16 WA State Budget infographic.

Peter Clements, Mint Realestate
0415 920 920 / peterclements@mintrealestate.com.au
Director / Licensee / Auctioneer

How the major banks have reacted to the latest RBA cut.

Australia’s major banks have not been uniform in their response to the Reserve Bank of Australia bringing interest rates to a new record low of 2 per cent on Tuesday.

The Commonwealth Bank announced it will not pass on in full the latest cut to the official interest rate. Australia’s biggest lender said it would wait until next Wednesday to cut its standard mortgage rate by 0.2 percentage points to 5.45 per cent, the lowest CBA rate in history.

Westpac also held back from passing on the full rate cut, lowering its variable mortgage rate by 22 basis points to 5.48 per cent.

ANZ Bank announced it would pass on the cut in full, effective on Friday, taking its standard variable mortgage rate to 5.38 per cent.

On Wednesday, National Australia Bank said it would reduce its standard variable rate by 0.20 per cent per annum to 5.43 per cent, effective from May 13, the lowest it’s been since 1978.

Treasurer Joe Hockey said he would be angry if banks didn’t pass on the rate cut in full, stating that “when the Reserve Bank acts, we expect the banks to also act in full as well.”

On Wednesday, CBA shares plunged 5.9 per cent to $82.98, wiping $8 billion from its market capitalisation. Westpac Banking Corp dropped 3.7 per cent to $33.99, while National Australia Bank and ANZ Bank fell 2.7 per cent. – The Real Estate Conversation, May 7 2015

Peter Clements, Mint Real Estate

0415 920 920 / peterclements@mintrealestate.com.au

Director / Licensee / Auctioneer