Multifaceted strategy needed to address housing affordability
The Federal Treasurer’s speech on housing affordability has highlighted the complexities before government in dealing with the economics of our housing and rental markets.
“With home ownership rates falling and house prices rising, governments at all levels must identify ways to remove blockages from our housing markets”, said Glenn Byres, Chief of Housing and Policy for the Property Council of Australia.
“We agree with the Treasurer’s assessment that the rental market is working well, but the housing supply pipeline in our cities is not.
“Housing supply across Australia is hindered by government property taxes and charges, unnecessary red tape, and planning systems that were built to constrain growth rather than facilitate it.
“We believe there is great scope for ‘build-to-rent’ initiatives which will encourage large scale private sector investment in new housing stock. We have seen large institutional investment in the United Kingdom and United States in this asset class. The Government is right to be looking at ways to kick start such investment in Australia’s housing markets and the private sector is ready, willing and able to help.
“The Federal Government should also be looking at ways to incentive the States and Territories to encourage new housing supply using national competition payments. Housing affordability is an issue which crosses all levels of government.
“The Treasurer is right to highlight the danger of ill-conceived ‘inclusionary zoning’ models that simply results in first home buyers subsidising other housing.
Mr Byres said the Treasurer’s speech also highlighted the delicate interaction between negative gearing and rental markets.
“Our rental markets are working well, with low rental yields in Sydney and Melbourne. ‘Negative gearing disruption’ is about making housing investment less attractive which will, in turn, impact the rental market.
“The Treasurer’s analogy of using ‘a scalpel rather than a sledgehammer’ is right. It’s why we believe there is scope, as part of broader tax reform, to reduce the capital gains tax discount to 40 per cent in the May Budget.
Mr Byres said the speech was rightly focused on increasing supply through more investment and work addressing supply constraints.
“This is where the government should be focused. It should continue to resist ideas like encouraging the use of superannuation for housing, which will simply create new demand pressures for housing.”
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