Taxes taking a toll on confidence

Taxes taking a toll on confidenceA long election campaign and property tax hikes are taking a toll in some states, says Property Council chief executive Ken Morrison, as industry confidence falls to its lowest level in three years.The latest ANZ Property Council Survey, the largest sentiment survey of its kind, polled almost 1600 respondents in June.The latest results reveal a confidence level of 128, down from 131 three months previously. A score of 100 is considered neutral.”We are seeing significant negative shifts in sentiment in NSW, Queensland and Western Australia, and a strong positive move in sentiment in South Australia,” Morrison says.There is a clear correlation between the worsening confidence levels in some states, he says, and the improvement in outlook in South Australia reflecting “the aggressive approach of the Weatherill Government in lowering property taxes”.Only NSW (139, down from 143) and Victoria (steady at 137) remain ahead of South Australia, with the Property Council’s SA executive director Daniel Gannon noting that, with a score of 133, the state had recorded a higher level of confidence than the national average for the first time.Gannon says investors are looking at the state, “knowing we have a more competitive tax and planning regime than in the past”, as well as a “significant defence pipeline and a potential nuclear pathway to attract investment in large-scale infrastructure projects and other flow-on activities”.While optimism is still comparatively high in NSW, construction activity expectations in the residential property sector fell by 45.9 index points between September 2015 and September 2016.”This dramatic drop is concerning for the future of housing supply especially in the context of the new state taxes on foreign investment in residential property,” says NSW executive director, Jane Fitzgerald.”Construction expectations are down slightly in the other asset classes of retail, office, industrial and retirement, but the drop in the residential class is more than seven times worse than the others. The survey underscores the fact that these are bad taxes being imposed at the wrong time.”In Victoria, the industry is becoming increasingly apprehensive about the future, says acting executive director Asher Judah, with ongoing economic uncertainty and tightening credit conditions “causing angst in an industry already grappling with unwelcome changes in government tax and planning policy”.Confidence levels in Queensland have also dropped, from 129 to 121 index points over the last quarter, with Queensland’s deputy executive director Jen Williams also pointing to the state government’s new transaction surcharge on foreign investors.”While the government’s new planning legislation and commitment to refresh the SEQ Regional Plan have been welcomed by the industry, the new tax on foreign investment undermines these positive reforms,” she says.”The uncertainty created by the longest election campaign in half a century, and recent state government decisions to increase property taxes are undoubtedly taking a toll,” Morrison concludes.