South Australia has delivered the nation’s highest level of property sector confidence for the sixth consecutive quarter – but here are three reasons why it could quickly fall off a cliff.
According to the latest ANZ/Property Council Survey, statewide confidence in South Australia sits at 144 for the September 2019 quarter, increasing its nation-leading position by seven points on last quarter. The survey includes responses from property industry professionals from South Australia and across the country.
“While every state recorded a quarterly increase, South Australia experienced the most modest uplift across all states despite remaining the most confident market in the nation,” said Property Council SA Executive Director Daniel Gannon.
“While confidence levels are more than 20 points above South Australia’s historic average and currently sit 16 points above the national average, recent government decisions will cause significant head-winds over the horizon.”
Mr Gannon has cited three reasons as evidence that South Australia’s confidence levels could fall off a cliff, as below.
- The State Government’s $120m land tax aggregation Budget measure, which will take a sledgehammer to ‘mum and dad’ and institutional investors even before the Valuer-General’s statewide revaluation measures kick in.
- South Australia’s anti-competitive land tax regime, which at 3.7% for the top aggregated tier is a disincentive to invest or continue to invest in the state.
- The foreign investor tax has remained in the State Government’s forward estimates, despite adding another layer of taxation for investors and homebuyers.
“At a time when forward work schedule expectations are up, state and national economic growth expectations are the country’s benchmark, and house capital growth expectations are an investment lighthouse for the nation, risky tax changes are the last thing we need.
“Recent announcements in the space and defence industries along with an important City Deal for Adelaide should be the economic catalyst South Australia needs.
“However, instead of doubling down on these economic green shoots, the State Government is now caught up in a jellyfish of destructive land tax changes that could scare off investors and hurt superannuants and their nest eggs.”
Mr Gannon said the State Government could immediately pursue key reforms to maintain historic confidence levels, as below.
- Significantly amend its recent $120m land tax aggregation proposal to ensure a revenue neutral and competitive outcome for investors and superannuants.
- Apply a handbrake to the Valuer-General’s statewide revaluation initiative, which under a modest 10% increase scenario would deliver an extra $75m every year in land tax revenue.
- Reduce land tax rates, spending and public sector inefficiencies to allow for policy reversals as listed above.
Source: Property Council of Australia