It looks like WA property owners are also facing huge increases in land tax bills. At least in NSW the announced the changes to land tax, WA landowners are being caught by stealth!

Land tax increases of up to 400% have landlords in Perth and elsewhere in WA seeing red. The bills are increasing because the Office of State Revenue is increasing the assessed value of the property.

To make matters worse if you the owner has multiple properties the tax is levied at a the rate of the combined properties, not on the appropriate rate for each property.

On the face of the increases are insane - particularly when you remember Perth has had a flat market for the last year or so. The West Australian is reporting that one owner of industrial properties, Joe Pintaudi was faced with:

The assessed value of my properties has gone up from $4.6 million to $9.5 million in the past year. That is ridiculous. Mr Pintaudi said his rents would have to rise by 25% to cover the $67,000 land tax bill

The Property Council of Australia wants the government to introduce reforms that include placing a cap on the percentage increases and land tax to be applied to individual properties, not aggregated values.

The reality is that its pretty crazy that states charge land tax at all. Wasn’t it supposed to have disappeared with the introduction of GST in 2000?  And if you are going to have a tax based on property values then it should be an independent organisation that is assessing the property’s value - otherwise this type of rort is just waiting to happen.

The reality is that the landlord who does try to hike his rents 25% is not going to be in business for long in the current economic climate, where many small businesses are folding  as the mining industry cash cow drys up. Even keeping the tenants at their current commercial rate might be an issue.  This is not a good time to be a commercial or industrial property investor in WA

Well we’ve reported before on the fragility of Western Australia’s mining towns property values. Towns such as Karratha, Newman and Port Hedland have boomed because of two factors: the jobs and the shortage of land to build more accommodation.

Now the boom is at least temporarily on-hold, with no hiring going on at all in the mining industry and many contractors finding their hours cut or their contracts not renewed. How much longer are there going to be people willing to pay the average rental of $1800/week for an average Dampier house. As soon as those cash-rich tenants dry up you can be sure of one thing - that the average 3-bedroom house in a dismal industrial town and port 1550 kilometres north of Perth will not hold its “value” of $910,000.

Instead in might be worth looking further south at Geraldton, a real town, which does not live by mining alone. Sure the town has been helped by the mining boom: but if you didn’t have a job, you may just choose to live there. Geraldton is a regional centre with a sunny Mediterranean climate which is lot more gentle than the 50 plus temperatures places further north see in the summer. With a population of 30,000 its approximately 435 kilometres north of Perth. Tourism and agriculture is important here along with gold, iron ore, mineral sands and garnet mining. And a typical house only costs $300,000. The local Council expects the population to increase to 80,000 by 2020 which sounds sustainable.

The State government has just spent $400 million on Geraldton’s infrastructure including expansion of the port. The port is still over-loaded though and future projects include the $3 billion dollar Oakajee port just south of town. Other major projects include the $2 billion Square Kilometre Array which is a radio telescope. If Geraldon wins this project then it will also host the largest super-computer in the Southern Hemisphere to process the data. Who said there weren’t high tech jobs in the regions?

It appears that there is no shortage of land in Geraldton - which is what is keeping the prices in check, so you won’t get the spectacular capital gain that investors further north have enjoyed, but you also will not see the huge capital losses that the Pilbara will see if the mining boom stays on hold for more than a few months

Port Hedland isn’t the sort of spot you’d choose for your next holiday. Its remote, hot for 1/2 the year, cold for the rest and dusty. Oh and its just one large industrial port for the iron ore from the Pilbara.

It probably won’t look anything like this one though:

Sanctuary Cove Queensland

But a $100 million resort-style village is being planned for Port Hedland - in an attempt to solve the accommodation shortage in Hedland and add beds for 1200 workers. Catering and facilities management group Compass is keen to begin construction before Christmas on an accommodation complex to be build on 12ha which is adjacent to the Port Hedland airport. To super-village will not only include individual single rooms with en-suite but also a swimming pool, gym, tennis courts, cinema, lawn bowls and an indoor cricket pitch.

The main employers in town include the mining giants of BHP-Biliton and Fortescue Metals Group. The companies have advised the local council tha an extra 3000 workers will be needed in town by the middle of next year - and at the moment there are no vacancies in town :and that includes the campgrounds. Poor quality of accommodation does not cut it for workers who are doing 12 hour shifts in a climate where shade temperatures over 50C are not uncommon for months over summer. Its even more difficult for the raft of smaller companies who provide services to the big employers such as catering and maintenance, who also have to accommodate their workers who may not be be on the 6-figure salaries paid by the big miners.

For anyone who is tempted to head north on the chance of a well-paid job: there is every chance of the job: just make sure you have your accommodation sorted out. Rents of over $1000/week for ordinary houses in Hedland are not uncommon

Dunsborough Beach, WA

The tide has finally turned on the holiday home market in south west WA.

Perth’s millionaires are finding it hard to move their second (or third or fourth) homes. Dunsborough, the premier town of the region and conveniently close to the Margaret River wineries, has seen the median house price fall 11.4% to $655,000 in the year to June. It might be worth remembering that as recently as 2003 the median house price in Dunsborough was $252,000.

Only 30% of Dunsborough property is owned by local residents: the vast majority of property owners are based in Perth, 2.5hours north of the town. Dunsborough is pure holiday town and holiday towns are often the first to feel the winds of change in real estate as very few people actually need a holiday home.

There are about 300 homes for sale, 100 more than at the same time last year, so it appears not just interest rates but also the sharemarket woes are having an effect on the holiday home real estate market.

Margaret River, Winery

Margaret River, inland from Dunsborough has not yet seen such a dramatic drop in house prices as Dunsborough. House price growth was still 12% for the year to June but agents are cautious and far from optimistic.

Further north the Busselton market is still rising too, but only just with growth of 1.4%, after showing average growth rates of 22% for the last five years.

So although the party may finally be over for the SW - its been a pretty good party for a very long time.