Federal Budget: The five tests of housing affordability

Unleashing new housing supply, reducing construction costs, helping Australians meet the deposit gap and removing red tape are the key practical measures by which tomorrow’s ‘housing affordability’ Budget should be judged says the Property Council.

“If this Budget is to make a real difference to house prices then it must tackle the fundamental issue of housing supply, housing costs and taxes on housing”, said Ken Morrison, Chief Executive of the Property Council of Australia.

The Property Council says when it comes to the critical economic and social issue of housing affordability, there are five tests by which the Federal Budget will be assessed:

  1. Does it encourage the construction of new dwellings – at affordable prices – to match our population growth?
  2.  Does it reduce the costs of buying housing and make it easier for people to move house?
  3.  Does it help close the deposit gap?
  4.  Does it open up innovative means to deliver affordable housing?
  5.  Does the proposal make the problem worse?

“These are the tests by which the Budget will be judged because these are the means by which we can seriously tackle housing affordability”.

“The most practical thing the Federal Government can do to address housing affordability is to link planning reform to national competition payments.

“If we aren’t addressing the major issue in our cities which is housing supply, then we are kidding ourselves. The best way to get supply moving is to unknot the complex and cumbersome planning systems which are slowing down our cities, costing jobs and pushing up house prices.

“Australians paid over $49 billion in property taxes last year and the answer to housing affordability is not more new taxes on property owners.

“Speculation about new charges on foreign owners and empty property taxes will deliver the government good headlines but won’t change the trajectory of house prices.

Mr Morrison said there were clear opportunities for the government to help tackle housing costs.

“We support the establishment of national competition payments in relation to State planning systems, measures that help reduce the ‘deposit gap’, institutional support for a new ‘built to rent’ asset class, help for older pensioners to downsize and support for affordable housing schemes.

“We have also said that given that we are in a low inflationary environment, there is scope to reduce the capital gains tax discount from 50 per cent to 40 per cent. The CGT system must continue to be non-discriminatory in terms of the assets that are taxed.”

Media contact: Paul Ritchie | E pritchie@propertycouncil.com.au