How do we improve housing affordability and supply in Australia?
A recent inquiry into housing affordability has proposed 16 recommendations to help combat Australia’s issue with home ownership. The report was issued by the House of Representatives Standing Committee on Tax and Revenue last month.
In his foreword Jason Falinski MP pointed to two unreconcilable trains of thought contributing significantly to the issue; academics and planners who blame the tax system turning housing into an unattainable asset and those who consider government intervention and administration as the problem.
Falinski’s belief is that given the amount of unoccupied space in Australia combined with our strong weekly earning capacity and high minimum wage, there was simply no reason for homes in Australia not to be affordable and accessible. “Australia has more useable land than any other continent in the world, outside the penguins of the South Pole,” says Falinski.
It was also noted that the younger generation were suffering the most, with housing affordability becoming most difficult for under 40’s, currently at its lowest levels since 1947. This is not only due to house prices but also the huge barrier to entry in saving large deposits and servicing home loans.
Falinski said calls for the Reserve Bank of Australia (RBA) to raise interest rates to lower house prices are absurd, stating that if the price of a house doubles, but interest rates halve, the affordability of a home is not changed.
According to the report a significant contributor to housing affordability is Australia is said to be the bureaucracy and confusing administration of planning and building which increases the cost of building and reluctance to pursue projects due to the uncertainty involved. “Econometric analysis has shown that in some places in Australia, planning restrictions are responsible for 67% of the cost of housing,” says Falinksi.
Second, taxes and levies were identified as another major problem especially those imposed on new home buyers, designed to raise funds not living standards.
The Australian Dream proposed 16 recommendations, key items highlighted below:
01. Allow first home buyers to access superannuation assets as home security
02. Negative gearing policies to remain the same
03. Replace stamp duty with land tax
04. Incentivise a reduction in planning restrictions and administration policies
05. Incentivise states and councils to provide more supply and affordable housing
06. Increase density of housing and community infrastructure
07. Adopt enquiry into homelessness recommendations
08. Ensure that house prices are not a specific objective of the RBA’s monetary policies
09. Review impact of taxes and regulations on build-to-rent housing
10. Continue to support the APRA standard to manage institutions lending for housing
If you would like to read the inquiry for yourself and find out more about the recommendations, please click here.
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