Western Australia is heading for a turnaround.
This is the consensus from the expert panel (REIWA, CBRE, Herron Todd White & Resolve Finance) at a presentation to MFAA members on Wednesday.
Why? Due to these indicators;
• A turnaround in population growth – slow but steady
• Unemployment rates decreasing (blue line on graph below)
• New Infrastructure (train lines, road improvements)
• Mining sector turn around – new mines creating new jobs
• Migration decreasing as new jobs created in WA
• Shopping centres – redevelopment & new centres (Mandurah Forum, Belmont Forum, new centre linked to the airport, and Madora Bay).
The Western Australian State Budget released Thursday 7 September 2017 revealed that growth in the State economy is expected to recover from 0.25 per cent in 2016-17, to three per cent in 2017-18. Employment growth is also forecast to recover, with nearly 20,000 jobs expected to be created in 2017-18, attributed to a modest increase in population growth expectations.
https://www.jtsi.wa.gov.au/about-the-state/quality-of-life/economy – good source to quote from:
While employment grew in most of Western Australia’s industries over the past decade, there was particularly high growth in mining, construction and mining-related services, which led to a major change in the industry structure of the labour market. Mining overtook agriculture, forestry and fishing’s share of total employment in 2006 and manufacturing’s share in 2011, while construction overtook manufacturing’s share of total employment in 2005. Professional, scientific and technical services overtook education and training’s share of total employment in 2013.
More recently, the economy has entered a new stage of development. Falling mining investment is being offset by increasing merchandise export volumes from the new productive capacity created by the investments of the past decade, while fluctuating commodity prices are affecting the value of merchandise exports.
The labour market has followed the swings of the mining investment cycle. The unemployment rate rose from 3 per cent in 2008 to around 6 per cent now, but changes in the unemployment rate have been moderated by migration and adjustments made to hours worked, allowing the labour market to adjust quickly to changes in labour demand.
The Western Australian economy will grow at a slower rate in coming years, but off a much larger productive base than before the mining expansion. The major mining projects developed over the past decade bring large, ongoing operating and capital expenditures to sustain their operations, creating opportunities for mining services, manufacturing and transport industries, and higher mining employment.
The competitiveness of agriculture, manufacturing, tourism, education and other services exports are less constrained by the high Australian dollar than they were at the height of the mining expansion. Businesses will also benefit from increased availability of labour and lower input costs.”
REIWA Deputy President Damian Collins said given the McGowan Government had faced challenges when it came to the State’s fiscal position, it was pleasing to hear there would be no increases to property tax for WA residents.
The Government is planning to introduce a four per cent foreign owner duty surcharge on purchases of residential property by foreign individuals and entities from 1 January 2019. This is expected to create $49 million in revenue by 2020-21.
“The introduction of a new foreign owner duty surcharge could hinder overseas property investment. Despite foreign investors only representing a small proportion of the WA property market, caution must be placed to ensure this section of the market does not reduce further.
“The Government expects to create revenue from this surcharge, however, it may only worsen the situation in terms of transfer duty revenue, as potential foreign investors may be less incentivised to purchase residential property in WA,” said Mr Collins.
In its pre-budget submission, REIWA recommended the Government introduce five key areas of reform:
- Make no further changes to rates or thresholds for land tax.
- No increase to transfer duty rates or change thresholds.
- Undertake a state tax review to assess the viability of a shift to a broad-based land tax system that ultimately removes transfer duty.
- Maintain the existing transfer duty exemption for first home buyers at $430,000 and re-introduce the $3,000 First Home Owners Grant for existing dwellings.
- Introduce a $10,000 concession on transfer duty for seniors over the age of 65 to encourage ‘right sizing’.
“REIWA welcomes the State Government’s commitment to keep property taxes on hold for WA residents and whilst some of the reforms we recommended were not addressed in the Budget, we appreciate the current fiscal position,” said Mr Collins.
The State Budget also revealed that growth in the State economy is expected to recover from 0.25 per cent in 2016-17, to three per cent in 2017-18. Employment growth is also forecast to recover, with nearly 20,000 jobs expected to be created in 2017-18, attributed to a modest increase in population growth expectations.