Housing affordability back on the agenda
The affordability of houses for sale in Australia is never far from anyone’s mind, whether you’re an investor, first time buyer, current homeowner or general observer of facts. So what has brought house price growth back to the fore? A new report from the Senate Economics References Committee.
Aptly, the title of the paper released by the Senate is ‘Out of reach? The Australian housing affordability challenge’. One of the key focuses of the report was to move affordable housing out of the shadow of welfare issues, and to see it given a much broader treatment, in which taxation and economic policy are considered.
The general sentiment among industry advocates was to recreate the role of a minister for housing as one that is responsible for housing as a larger economic issue, addressing affordability issues at every turn, rather than just at the welfare end. The Housing Industry Association (HIA) submitted that a minister in this position would be able to keep state governments accountable on how they use their funds allocated to increasing housing affordability.
The Australian Council of Social Service recommended that the position be seated within the central government with more direct ties to the primer minister and treasury. This is as opposed to under the Department of Social Services, where the portfolio would take on a welfare role rather than a proactive affordability one, aimed at easing the burden of housing for all low-earning Australians.
Another key aspect addressed in the report was the issue of stamp duty. While real estate in Australia is currently plagued by inefficient taxes, the next step forward in abolishing stamp duty is a key area of debate. The most prevalent suggestion is the move to a broader-based tax, such as a modification to the current land tax. Housing industry bodies fall on either side of this argument, some saying it would be more efficient, while others indicating it would increase the burden on consumers and investors.
The Real Estate Institute of Australia (REIA) has welcomed the release of the report, with CEO Amanda Lynch indicating that the issue of housing affordability needs to be addressed by all three levels of government.
“It is pleasing to see the report recommends the appointment of a Housing Minister and that the federal government take a greater leadership role in this area. It is also very pleasing to see the report’s recommendation that stamp duties be phased out,” said Ms Lynch in an 8 May statement.
The HIA was equally appreciative of the impetus the report puts behind affordability related change in the housing sector.
“Housing affordability is a challenge for many Australians. The Senate Economics Committee report makes a valuable contribution towards addressing this national issue,” noted Graham Wolfe, the HIA’s chief executive of Industry Policy and Media.
Mr Wolfe went on to convey that reports such as this keep the price of homes for sale on the national political agenda – something that is sorely needed by those most affected by affordability issues.
“The committee recognises the distortionary impact of state taxes such as stamp duty and suggests they be replaced in the long term with more broad based taxes, such as a modified version of the current land tax. These are the kind of discussions that we need to be having.”
However, both Ms Lynch of the REIA and David Airey, president of the Real Estate Institute of Western Australia raised concerns over the reports suggestion to review negative gearing – which they say has been proven to increase the availability and affordability of houses for rent and for sale across the country.