Treasurer Scott Morrison has today indicated that the May 2017 Budget will have Australia’s growing housing affordability problem in mind.
While Morrison said the overall economic outlook remained positive, and Australia was set up for growth in the coming year as industry recovers from the slump in mining, housing affordability remains a sticking point.
Responding to a question from Harley Dale from the Housing Industry Association, Morrison reiterated his earlier stance that “there is no silver bullet” to solving the problem, but said that it is an ongoing concern.
“This is an important issue, and not just in Sydney and Melbourne. There are people struggling with rental affordability issues in suburbs of Perth, in Tasmania, in Townsville. There are people on housing waiting lists all around the country.”
Housing affordability is also a continuing cost to the Australian government, which he said has funneled $9 billion into the national affordable housing agreement and another $11 billion into housing support and assistance.
Morrison said he was committed to continuing working toward a solution, because “it doesn’t get more essential” than putting a roof over your head.
“My constituents expect me to have a crack at it. And I think Australians who are struggling expect us to have a crack at it and we will do our best to do the things that we believe we can do to improve that situation,” he said.
As for how housing affordability is to be addressed, Morrison was strongly in favour of building more homes, but said that the full budget announcement would have further details.
In other areas of housing, it seems negative gearing is unlikely to be touched by the new budget, as Morrison said “dramatic and dangerous changes” to negative gearing legislation were unnecessary. He pointed out that there had already been signs that the “heat in the housing market may be coming off, especially in the apartment market,” thanks to a crackdown on foreign investing.
Foreign investment applications for residential housing dropped from about 40,000 last year to an expected 15,000 this year, according to Morrison, and while it is important to temper investor interest, he also said that “policy overreach” - for example, over-legislation of negative gearing - could have harmful impacts.
As far as interest rates go, Morrisson agreed with the RBA’s stance that “sustained increases in interest rates would put more pressure on mortgage holders,” and that risk in this area needs to be carefully managed.
In light of this, he said that APRA’s recent moves to further restrict lending, in particular to interest-only borrowers, was the right decision, and has the government's full support.
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