The Real Estate Institute of Western Australia President has warned that Foreign Buyers Surcharge "will continue to kill jobs" in the state after a $1.4 billion development in Perth was put on hold.

WAToday reported on Thursday that the Far East Consortium had stalled its Perth Hub development following declining pre-sales, which the company attributed to the "devastating" impact of the state government's foreign buyer tax.

REIWA President Damian Collins said the tax, which was introduced at the start of the year, had come at "the worst possible time" for the state. 

"Our building industry is already on its knees, and our real estate market has been flat for four or five years," he said.

"I have no idea why you would choose now to introduce a tax that is going to kill jobs and investment." 

WA was the last state to introduce the Foreign Buyers Duty, following New South Wales, Victoria, South Australia and Queensland in adopting the tax.

Foreign Buyers Duty charges foreign investors an extra 7 per cent of the value of the property on top of the usual transfer duty that is payable on the purchase of the property or land.

According to the WA state government, the tax is expected to raise "$21 million in its first full year (2019-20)".

The NAB's Residential Property Survey for Q4 2018 showed that there had been a decline in foreign buying activity over the course of 2018 with investment, with foreign buyers representing only 2.5% of the established WA residential housing market in December 2018, and only 4.1% of new properties. 

Mr Collins said while he expected the surcharge to remain in the short-term, questions needed to be asked about its long term viability.

"The treasury needs think about how much money they are losing through the payroll tax and other taxes coming from people not being employed," he said.

"They are unlikely to back down now because they have only just introduced it, but I would hope that once they see how little revenue they are getting across the next year or two, they will wake up and change their mind."

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